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Job Order Costing System at Burlington Clock Works (Vermont Clock Works)

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Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year. The following events occurred during October.
a. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.
b. Twenty brass counterweights were requisitioned for production. Each weight cost $23.
c. Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material.
d. Depreciation on the clockworks building for October was $8,000.
e. A $400 utility bill was paid in cash.
f. Time cards showed the following usage of labor:
Job number G60: 12 grandfather's clocks, 1,000 hours of direct labor
Job number C81: 20 cuckoo clocks, 700 hours of direct labor
The master clockmakers (direct-labor personnel) earn $20 per hour.
g. The October property tax bill for $910 was received but has not yet been paid in cash.
h. The firm employs laborers who perform various tasks such as material handling and shop cleanup. Their wages for October amounted to $2,500.
i. Job number G60, which was started in July, was finished in October. The total cost of the job was $14,400.
j. Nine of the grandfather's clocks from job number G60 were sold in October for $1,500 each.
Required:
1. Calculate the firm's predetermined overhead rate for the year.
2. Prepare journal entries to record the events described above.

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The solution explains how to determine the predetermined overhead rate and how to prepare the journal entries for the given transactions. This solution is provided in an attached Word document.

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Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year. The following events occurred during October.
a. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.

Total amount is 3,000X11=$33,000. The journal entry is
Raw-Material Inventory Dr......................33,000
Accounts Payable Cr.................. 33,000

b. Twenty brass counterweights were requisitioned for production. Each weight cost $23.

What is requisitioned for production is direct material and will be debited to work in process. The amount is 20X23=$460. The journal entry is
Work-in-Process Inventory Dr..................... 460
Raw-Material Inventory Cr...................... 460

c. Five gallons of glue were requisitioned for production. The glue ...

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