Able Corporation and Bearing Manufacturing Company

Able Corporation and Bearing Manufacturing Company

Problem 1:

Able Corporation incurred the following costs.

Beginning direct materials inventory	$16,000
Beginning work-in-process inventory	$7,000
Beginning finished goods inventory	$19,000
Ending direct materials inventory	$16,000
Ending work in process	$14,000
Ending finished goods	$ 26,000
Factory supervisor’s salary	$28,000
Depreciation on plant	$12,000
Sales	$800,000
Selling and administrative expenses	$125,000
Plant maintenance	$6,000
Plant utilities	$11,000
Direct material purchases	$215,000
Direct labor	$240,000

Calculate the following.

a. Direct materials used

b. Cost of goods manufactured

c. Cost of goods sold

d. Operating income

Problem 2:

Below is information from Job Card 506 for the Bearing Manufacturing Company. Date started: June 15, 2015 Date Completed: July 24, 2015

Date	Direct Materials	Direct Labor	Applied Factory Overhead	Job Total
6/15/2015	$ 5,000
6/25/2015		$1,200	$600
6/27/2015	$2,300
7/6/2015		$ 1,540	$770
7/15/2015	$2,600
7/24/2015		$760	$380

Job 506 was sold on credit on July 24, 2015, for 180% of its cost. Factory OH was applied on the basis of DL.

Required:

a. Prepare the journal entries to record the costs incurred for Job 506 in 2015 for direct materials, direct labor, and factory overhead.

b. Prepare the journal entry to record the completion of Job 506.

c. What is the predetermined factory overhead rate for Bearing Manufacturing?

d. Prepare the journal entries to record the sale of Job 506.

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