Preparing general journal entries and income statements
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Activity Activity Estimated Expected
Cost Pool Measure OH Cost Activity
Machining Machine-hours $180,000 1,000
Purchase orders Number of orders 90,000 600
Parts management Number of parts types 60,000 300
Testing Number of tests 150,000 250
General factory Direct labor-hours 280,000 20,000
Beginning of year inventory balances:
Raw materials $7,000
Work in process 6,000
Finished goods 10,000
Transactions:
a. Raw materials purchased $595,000
b. Raw materials withdrawn for use 600,000
Direct 560,000
Indirect 40,000
c. Costs for employee services:
Direct labor 90,000
Indirect labor 300,000
Sales commissions 85,000
Administrative salaries 245,000
d. Sales travel costs 38,000
e. Various factory overhead costs 237,000
f. Advertising costs 190,000
g. Depreciation 270,000
Factory operations 210,000
Selling and administrative activities 60,000
h. Manufacturing overhead:
Activity Actual
Cost Pool Activity
Machining 1,050 MHs
Purchase orders 580 orders
Parts management 330 part types
Testing 265 tests
General factory 21,000 DLHs
I. Cost to manufacture finished goods $1,450,000
j. Sales on account 2,100,000
Cost to manufacture goods sold 1,400,000
Check figure:
Total overhead overapplied $8,000
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Solution Summary
The expert prepares general journal entries and income statement for the year.
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