9/6/2019 Assignment 2:Job Order Costing

Cost Accounting: ACCT 1201 (June 2019) Shasitaran Ambigavathy

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Assignment 2:Job Order Costing instructions | help
 
 1. value:
10.00 points

Problem 8-25 Cost Flows; T-Accounts; Income Statement [LO3, LO6, LO8, LO9]

Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance
sheet accounts as of January 1, the beginning of its fiscal year, are given below.

Supreme Videos, Inc.

Balance Sheet
January 1
Assets
Current assets:
Cash $63,500
Accounts receivable 102,000
Inventories:
Raw materials(film, costumes) $32,800
Videos in process 45,400
Finished videos awaiting sale 85,100 163,300
Prepaid insurance 9,100
Total current assets 337,900
Studio and equipment 736,000
Less accumulated depreciation 211,000 525,000
Total assets $862,900
Liabilities and Stockholders' Equity
Accounts payable $168,000
Capital stock $420,000
Retained earnings 274,900 694,900
Total liabilities and stockholders' equity $862,900

Because the videos differ in length and in complexity of production, the company uses a joborder costing
system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to
videos on the basis of camera-hours of activity. At the beginning of the year, the company estimated that it
would work 7,600 camera-hours and incur $456,000 in studio overhead cost. The following transactions
were recorded for the year:

a. Film, costumes, and similar raw materials purchased on account, $190,000.

b. Film, costumes, and other raw materials issued to production, $205,000 (85% of this material was
considered direct to the videos in production, and the other 15% was considered indirect).
c. Utility costs incurred in the production studio, $74,700.
d. Depreciation recorded on the studio, cameras, and other equipment, $88,000. Three-fourths of this
depreciation related to actual production of the videos, and the remainder related to equipment used in
marketing and administration.
e. Advertising expense incurred, $133,000.
f. Costs for salaries and wages were incurred as follows:

Direct labor(actors and directors) $82,450

Indirect labor (carpenters to build sets,
$112,000
costume designers, and so forth)
Administrative salaries $95,300

g. Prepaid insurance expired during the year, $7,800 (80% related to production of videos, and 20%
related to marketing and administrative activities).
h. Miscellaneous marketing and administrative expenses incurred, $9,000.
i. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,000
camera-hours of activity during the year.
j. Videos that cost $559,000 to produce according to their job cost sheets were transferred to the finished
videos warehouse to await sale and shipment.
k. Sales for the year totaled $927,000 and were all on account. The total cost to produce these videos
according to their job cost sheets was $605,000.
l. Collections from customers during the year totaled $860,000.
m.Payments to suppliers on account during the year, $500,000; payments to employees for salaries and
wages, $288,750.

Requirement 1:
Prepare a T-account for each account on the company's balance sheet and enter the beginning balances.
Make an entry, treating it as transaction "n." in the T-accounts to close any balance in the Studio Overhead
account to Cost of Goods Sold. (Record the transactions in the given order. Omit the "$" sign in your
response.)

Cash

Beg. Bal. (Click to select)

(Click to select)

End. Bal.
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Accounts Receivable

Beg. Bal. (Click to select)

(Click to select)

End. Bal.

Raw Materials

Beg. Bal. (Click to select)

(Click to select)

End. Bal.

Prepaid Insurance

Beg. Bal. (Click to select)

End. Bal.

Videos in Process

Beg. Bal. (Click to select)

(Click to select)
(Click to select)
(Click to select)

End. Bal.

Finished Goods

Beg. Bal. (Click to select)

(Click to select)

End. Bal.

Studio and Equipment

Bal.
Accumulated Depreciation

Beg. Bal.
(Click to select)

End. Bal.

Studio Overhead

(Click to select) (Click to select)

(Click to select)
(Click to select)
(Click to select)
(Click to select)

(Click to select) End. Bal.

Depreciation Expense

(Click to select)
Insurance Expense

(Click to select)
Advertising Expense

(Click to select)
Miscellaneous Expense

(Click to select)
Administrative Salaries Expense

(Click to select)

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Sales

(Click to select)
Cost of Goods Sold

(Click to select) (Click to select)

End. Bal.

Accounts Payable

(Click to select) Beg. Bal.

(Click to select)
(Click to select)
(Click to select)
(Click to select)

End. Bal.

Salaries & Wages Payable

(Click to select) (Click to select)

Bal.

Capital Stock

Bal.
Retained Earnings

Bal.

Requirement 2:
Was manufacturing overhead underapplied or overapplied for the year? (Input the amount as positive
value. Omit the "$" sign in your response.)

Manufacturing overhead was (Click to select) by $ for the year.

Requirement 3:
Prepare an income statement for the year. (Input all amounts as positive values. Omit the "$" sign in
your response.)

Supreme Videos, Inc.

Income Statement
For the Year Ended December 31
(Click to select) $
(Click to select)
Gross margin
Selling and administrative expenses:
(Click to select) $
(Click to select)
(Click to select)
(Click to select)
(Click to select)
(Click to select) $

References

Worksheet Learning Objective: 08-03 Learning Objective: 08-09 Compute underapplied or

Compute predetermined overapplied overhead cost and prepare the journal entry
overhead rates in the costing to close the balance in Manufacturing Overhead to the
process. appropriate accounts.

Problem 8-25 Cost Learning Objective: 08-06

Flows; T-Accounts; Apply overhead cost to Work
Income Statement in Process using a
[LO3, LO6, LO8, LO9] predetermined overhead
rate.

Difficulty: Basic Learning Objective: 08-08

Use T-accounts to show the
flow of costs in a job-order
costing system.

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