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- Download: https://solutionzip.com/downloads/exquisite-furnishings/
- Exquisite Furnishings manufactures customized household furnishings. The company uses a perpetual inventory system and has a highly labour intensive production process, so it assigns manufacturing overhead based on direct labour cost. The company expects to incur $2,205,000 0f manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2017.
- At the end of December 2016, Exquisite reported work in process inventory (Job 501) of $93,000 The following events occurred during January 2017.
- i) Purchased materials on account, $392,000
- ii) Incurred manufacturing wages of $400,000
- iii) Requisitioned direct materials and used direct labour in manufacturing
- Direct Materials Direct Labour
- Job 501 $70,200 $61,200
- Job 502 97,500 115,600
- Job 503 105,300 78,200
- Job 504 117,000 85,000
- iv) Issued indirect materials to production, $30,000
- v) Charged indirect manufacturing wages to production, $60,000
- vi) Other manufacturing overhead costs incurred on units 501 to 504 amounted to $134,000
- vii) Allocated overheads to jobs at the predetermined rate
- viii) Units completed: 501, 502 & 504
- ix) Shipped/sold units 501 & 504 (billed customers at a mark-up of 50% on cost)
- Required:
- (a) Compute Exquisite’s predetermined manufacturing overhead rate for 2017. (2 marks)
- (b) Calculate the total manufacturing costs for each job. (4½ marks)
- (c) Using the total figures, record the above transactions in the general journal. (9 marks)
- (d) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account, and state the balance on the account before performing end of period closing entries. State the journal entries necessary to dispose of the variance. Assume that the manufacturing overhead
- variance is immaterial. (3 marks)
- (e) What is the balance in the Cost of Goods Sold account after the adjustment? (2 marks)
- (f) Compute Exquisite’s gross profit earned on the jobs, after adjusting for the manufacturing
- overhead variance (2 marks)
- (g) Determine the balance in Work in Process Inventory on January 31. (2½ marks)
- Download: https://solutionzip.com/downloads/exquisite-furnishings/
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