Managerial Accounting

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Business Finance

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Managerial accounting. In these problems, you will apply what you have learned in this week’s textbook reading.

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Predetermined Factory Overhead Rate Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: Disposable supplies Depreciation expense Utilities Nurse salaries Technician wages Total operating room overhead $196,400 35,400 20,600 295,000 96,600 $644,000 The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. a. Determine the predetermined operating room overhead rate for the year. $ per hour b. Bill Harris had a 4-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)? $ c. During January, the operating room was used 194 hours. The actual overhead costs incurred for January were $43,600. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number. $ Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,600 of indirect materials and $12,100 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form: Job 301 Job 302 Direct materials $10,600 Direct materials $21,900 Direct labor 8,300 Direct labor 15,000 Factory overhead6,557 Factory overhead11,850 Total $25,457Total $48,750 CHART OF ACCOUNTS Old School Publishing Inc. General Ledger CHART OF ACCOUNTS Old School Publishing Inc. General Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 132 Work in Process 133 Factory Overhead 134 Finished Goods 141 Supplies 142 Prepaid Insurance 143 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 241 Lease Payable 251 Wages Payable 252 Consultant Fees Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Office Supplies Expense 540 Administrative Expenses 560 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles. a. Direct and indirect materials used. b. Direct and indirect labor used. c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost). d. Completion of Jobs 301 and 302. PAGE 10 JOURNAL DATE 1 2 3 4 5 6 7 8 9 10 DESCRIPTION POST. REF. DEBIT CREDIT Sweeties, Inc., manufactures a sugar product by a continuous process, involving three production departments-Refining, Sifting, and Packing. Assume that records indicate that direct materials, direct labor, and applied factory overhead for the first department, Refining, were $385,000, $143,000, and $99,000, respectively. Also, work in process in the Refining Department at the beginning of the period totaled $29,600, and work in process at the end of the period totaled $29,800. Required: a. b. CHART OF ACCOUNTS Sweeties, Inc. General Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials Work in Process141 Refining Work in Process142 Sifting Work in Process143 Packing Factory Overhead151 Refining Factory Overhead152 Sifting Factory Overhead153 Packing 161 Finished Goods 171 Supplies On September 30, journalize the entry to record the flow of (1) costs into the Refining Department during the period for direct materials.* On September 30, journalize the entry to record the flow of (2) costs into the Refining Department during the period for direct labor.* On September 30, journalize the entry to record the flow of (3) costs into the Refining Department during the period for factory overhead.* On September 30, journalize the entry to record the transfer of production costs to the second department, Sifting.* *Refer to the Chart of Accounts for exact wording of account titles. REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expen 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory Accumulated 192 Depreciation-Factory LIABILITIES Accounts 210 Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary a(1). On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for direct materials. Refer to the Chart of Accounts for exact wording of account titles. JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 a(2). On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for direct labor. Refer to the Chart of Accounts for exact wording of account titles. JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 a(3). On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for factory overhead. Refer to the Chart of Accounts for exact wording of account titles JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 b. On September 30, journalize the entry to record the transfer of production costs to the second department, Sifting. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 Equivalent Units of Production The Converting Department of Hopkinsville Company had 1,080 units in work in process at the beginning of the period, which were 75% complete. During the period, 22,800 units were completed and transferred to the Packing Department. There were 1,200 units in process at the end of the period, which were 75% complete. Direct materials are placed into the process at the beginning of production. Determine the number of equivalent units of production with respect to direct materials and conversion costs. If an amount is zero, enter in "0". Hopkinsville Company Number of Equivalent Units of Production Whole Units Inventory in process, beginning Started and completed Transferred to Packing Department Inventory in process, ending Total Direct Materials Equivalent Units Conversion Equivalent Units 5. Drawing Department Direct Materials and Conversion Equivalent Units of Production For November Direct Materials Whole Units Equivalent Units Inventory in process, November 1 Started and completed in November Transferred to Winding Department in November Inventory in process, November 30 Conversion Equivalent Units Total 6. b. If all direct materials are placed in process at the beginning of production, determine the direct materials and conversion equivalent units of production for November for the Winding Department. If an amount is zero, enter in "0". Winding Department Direct Materials and Conversion Equivalent Units of Production For November Direct Materials Whole Units Equivalent Units Inventory in process, November 1 Started and completed in November Transferred to finished goods in November Inventory in process, November 30 Total • • Conversion Equivalent Units
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