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Question: 2 swin co uses a job costing system and manufacturing...

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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.

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