Question: 2 swin co uses a job costing system and manufacturing...
2. Swin Co. uses a job costing system, and manufacturing overhead is applied on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,200,000 of manufacturing overhead costs and use 60,000 machine hours.
Swin Co recorded the following events during the month of October
(a) Beginning balances:
Raw materials inventory (RM): $150,000
Work in process inventory (WIP): $170,000
Finished goods inventory (FGs): $50,000
(b) Purchased 250,000 kilograms of raw materials on account. The cost was $5.00 per kilogram.
(c) Issued 200,000 kilograms of materials to production. Assume all materials issued are at $5 per kilogram.
(d) Incurred $280,000 of direct labour costs and $60,000 of indirect labour costs.
(e) Recorded depreciation on equipment for the month, $23,000.
(f) Recorded $41,500 of insurance costs for the manufacturing property.
(g) Recorded $36,800 for utilities and other miscellaneous items for the manufacturing plant.
(h) Completed job B20 costing $190,000 and job B21 costing $790,000 during the month and transferred them to Finished Goods inventory account.
(i) Shipped job B21 to the customer during the month.
(j) Used 11,000 machine hours during October.
Required: Complete the relevant T- accounts to show the flow of costs through the company’s manufacturing accounts.
Hints for T Account: Include Raw Materials Inventory, work in process inventory, finished goods inventory, cost of goods sold, manufacturing overhead.