Act 305 Module 2 Assignment Choice 1: Classification of Costs

ACT 305 Module 2 Assignment Choice 1: Classification of Costs

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ACT 305 Module 2 Assignment Choice 1: Classification of Costs

Critical Thinking

Assignment Choice #1: Classification of Costs

Hoover, Inc., uses a job-order coding system. The company’s inventory balances on February 1, the start of its fiscal year, were as follows:

Raw Materials Inventory $69,325

Work in Process Inventory $55,100

Finished Goods Inventory $81,256

During the year, the following transactions were completed:

221. Raw materials were purchased on account, $215,221.

222. Raw materials were issued from the storeroom for use in production, $198,000 (70% direct and

223. indirect).

224. Employee salaries and wages were accrued as follows: direct labor, $243,300; indirect labor,

$98,750; and selling and administrative salaries, $72,340.

233. Utility costs were incurred in the factory, $79,233.

234. Advertising costs were incurred, $110,600.

235. Prepaid insurance expired during the year, $35,000 (80% related to factory operations, and 20%

related to selling and administrative activities).

1. Depreciation was recorded, $192,100 (75% related to factory assets, and 25% related to selling

and administrative assets).

1. Manufacturing overhead was applied to jobs at the rate of 160% of direct labor cost.

2. Goods that cost $720,200 to manufacture according to their job cost sheets were transferred to

the finished goods warehouse.

1. Sales for the year totaled $1,293,300 and were all on account. The total cost to manufacture

these goods according to their job cost sheets was $725,825.

Instructions:

Submit your assignment as an Excel spreadsheet with each tab labeled by item number. Demonstrate the following:

1. Prepare the journal entries to record the transactions for the year.

2. Prepare the T-accounts for raw materials inventory, work in process...