Silverton Manufacturing Company Builds Highly Sophisticated Engine Parts for Cars

Essay

Silverton Manufacturing Company builds highly sophisticated engine parts for cars competing in stock racing and drag racing. The company uses a normal costing system that applies factory overhead on the basis of direct labor-hours. For 2020, the company estimated that it would incur $256,000 in factory overhead costs and 16,000 direct labor-hours. The April 1, 2020, balance in inventory accounts follow:
$\begin{array}{lcr}\text { Materials Inventory } & \$54,000 \\\text { Work-in-Process Inventory (Y12) } & \$ 21,000 \\\text { Finished Goods Inventory (Z11) } & \$ 108,000\end{array}$
Job Y12 is the only job in process on April 1, 2020. The following transactions were recorded for the month of April:
(1) Purchased materials on account, $180,000.
(2) Issued $182,000 of materials to production, $8,000 of which was for indirect materials.
Cost of direct materials issued:
$$\begin{array} { l r } \text { Job Y12 } & \$ 46,000 \\\text { Job D20 } & 84,000 \\\text { Job E33 } & 44,000\end{array}$$
(3) Incurred and paid payroll cost of $40,920; Direct labor cost ($20/hour; total 1,196 hours):
$$\begin{array} { l r } \text { Job Yl2 } & \$ 12,220 \\\text { Job D20 } & 8,060 \\\text { Job E33 } & 3,640 \\\text { Indirect labor } & 5,000 \\\text { Selling and adrinistrative salaries } & 12,000\end{array}$$
(4) Recognized depreciation for the month:
Manufacturing asset $4,400
Selling and administrative asset 3,400
(5) Paid advertising expenses $12,000.
(6) Incurred factory utility costs 2,600.
(7) Incurred other factory overhead costs 3,200.
(8) Applied factory overhead to production on the basis of direct labor-hours.
(9) Completed Job Y12 during the month and transferred it to the finished goods warehouse.
(10) Sold Job Z11 on account for $118,000.
(11) Received $50,000 of collections on account from customers during the month.
Required:
(a) Calculate the company's predetermined overhead rate.
(b) What was the balance of the Materials Inventory account on April 30, 2020?
(c) What was the balance of the Work-in-Process Inventory control account on April 30?