Answer:
1. Dr Salaries and Administrative salaries 240,000
Dr Manufacturing Overhead 150,000
Dr Work in process 600,000
Cr Wages Payable 990,000
2. $666,250
3. $1,746,250
4. Dr Finished goods 1,680,000
Cr Work in Process 1,680,000
5. $84,250
6. $16,250
7. $25,000
8. $1,673,750
9. $1,126,250
10. $519,250
Explanation:
1. Preparation of the journal entry to record the labor costs incurred
Dr Salaries and Administrative salaries 240,000
Dr Manufacturing Overhead 150,000
Dr Work in process 600,000
Cr Wages Payable 990,000
(To record labor cost incurred)
2. Preparation of the total amount of manufacturing overhead applied to production
Manufacturing overhead applied= 41,000 hours * $16.25
Manufacturing overhead applied= $666,250
3. Preparation of the total manufacturing cost added to Work in Process
Raw Materials $480,000
Direct Labor 600,000
Manufacturing Overhead 666,250
Cost added to WIP $1,746,250
4. Preparation of the journal entry to record the transfer of completed jobs
Dr Finished goods 1,680,000
Cr Work in Process 1,680,000
(To record the transfer of completed jobs)
5. Calculation for the ending balance in Work in Process:
Ending balance in Work in Process
Beginning Balance $18,000
b $480,000
f $666,250
c $600,000 $1,680,000 g
Ending Balance $84,250
6. Calculation for Overapplied manufacturing overhead
Overapplied manufacturing overhead= ($666,250-$650,000)
Overapplied manufacturing overhead= $16,250
Based on the above calculation the manufacturing overhead is overapplied for the year By the amount of $16,250
7. Calculation for the ending balance in Finished Goods
Ending balance in Finished goods
Dr Beginning balance $35,000
Dr (g) 1,680,000
Cr $1,690,000 (h)
Dr Ending balance $25,000
8. Calculation for the adjusted cost of goods sold for the year
Cost of goods sold $1,690,000
Less:Manufacturing overhead $16,250
The cost of goods sold for the year $1,673,750
9. Calculation for the gross margin for the year
Sales $2,800,000
Less:Cost Of Goods Sold ($1,673,750)
Gross Profit $1,126,250
10. Calculation for the net operating income for the year
Gross Profit $1,126,250
Less:Selling and Administrative Salaries $240,000
Less: Selling and Administrative Expenses $367,000
Net Operating Income $519,250
