Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Textbook Question
Chapter 7, Problem 58P
Tracing Costs in a Job Company
The following transactions occurred in January at Apex Manufacturing, a custom parts supplier. Apex uses
- 1. Purchased $75,180 in materials on account.
- 2. Issued $2,100 in supplies from the materials inventory to the production department.
- 3. Paid for the materials purchased in transaction (1).
- 4. Issued $35,700 in direct materials to the production department.
- 5. Incurred wage costs of $58,800, which were debited to Payroll, a temporary account. Of this amount, $18,900 was withheld for payroll taxes and credited to Payroll Taxes Payable. The remaining $39,900 was paid in cash to the employees. See transactions (6) and (7) for additional information about Payroll.
- 6. Recognized $29,400 in fringe benefit costs, incurred as a result of the wages paid in (5). This $29,400 was debited to Payroll and credited to
Fringe Benefits Payable. - 7. Analyzed the Payroll account and determined that 60 percent represented direct labor; 30 percent, indirect manufacturing labor; and 10 percent, administrative and marketing costs.
- 8. Paid for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant totaling $45,360.
- 9. Applied overhead on the basis of 175 percent of direct labor costs.
- 10. Recognized
depreciation of $24,150 on manufacturing property, plant, and equipment.
Required
- a. Prepare
journal entries to record these transactions. - b. The balances that appeared in the accounts of Apex Manufacturing are shown next.
Prepare T-accounts to show the flow of costs during the period.
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Chapter 7 Solutions
Fundamentals Of Cost Accounting (6th Edition)
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