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 2016,the company estimated that it would incur $256,000 in factory overhead costs and 16,000 direct labor-hours.The April 1,2016,balance in inventory accounts follow:
$$\begin{array} { | l | r | } \hline \text { Materials Inventory } & \$ 54,000 \\\hline \text { Work-ir-Process Inventory } ( \mathrm { Y } 12 ) & \$ 21,000 \\\hline \text { Finished Goods Inventory } ( Z 11 ) & \$ 108,000 \\\hline\end{array}$$
Job Y12 is the only job in process on April 1,2016.The following transactions were recorded for the month of April:
a.Purchased materials on account,$180,000.b.Issued $182,000 of materials to production,$8,000 of which was for indirect materials.Cost of direct materials issued:
$$\begin{array} { | l | r | } \hline \text { Job } Y 12 & \$ 46,000 \\\hline \text { Job D20 } & 84,000 \\\hline \text { Job E33 } & 44,000 \\\hline\end{array}$$
c.Incurred and paid payroll cost of $40,920;Direct labor cost ($20/hour;total 1,196 hours):

d.Recognized depreciation for the month:
Manufacturing asset $4,400
Selling and administrative asset 3,400
e.Paid advertising expenses $12,000.
f.Incurred factory utility costs 2,600.
g.Incurred other factory overhead costs 3,200.
h.Applied factory overhead to production on the basis of direct labor-hours.
i.Completed Job Y12 during the month and transferred it to the finished goods warehouse
.j.Sold Job Z11 on account for $118,000.
k.Received $50,000 of collections on account from customers during the month.
Required:
(1)Calculate the company's predetermined overhead rate.
(2)Prepare journal entries for the April transactions.Record job-specific items in individual Work-in-Process accounts.
(3)What was the balance of the Materials Inventory account on April 30,2016?
(4)What was the balance of the Work-in-Process Inventory control account on April 30?