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Act 305 Module 2 Assignment Choice 1: Classification of Costs

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ACT 305 Module 2 Assignment Choice 1: Classification of Costs

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ACT 305 Module 2 Assignment Choice 1: Classification of Costs

Critical Thinking  

Assignment Choice #1: Classification of Costs
Hoover, Inc., uses a job-order coding system.   The company’s inventory balances on February 1, the start of its fiscal year, were as follows:
Raw Materials Inventory $69,325
Work in Process Inventory $55,100
Finished Goods Inventory $81,256


During the year, the following transactions were completed:
221. Raw materials were purchased on account, $215,221.
222. Raw materials were issued from the storeroom for use in production, $198,000 (70% direct and
223. indirect).
224. Employee salaries and wages were accrued as follows:   direct labor, $243,300; indirect labor,
$98,750; and selling and administrative salaries, $72,340.
233. Utility costs were incurred in the factory, $79,233.
234. Advertising costs were incurred, $110,600.
235. Prepaid insurance expired during the year, $35,000 (80% related to factory operations, and 20%
related to selling and administrative activities).
1. Depreciation was recorded, $192,100 (75% related to factory assets, and 25% related to selling
and administrative assets).
1. Manufacturing overhead was applied to jobs at the rate of 160% of direct labor cost.
2. Goods that cost $720,200 to manufacture according to their job cost sheets were transferred to
the finished goods warehouse.
1. Sales for the year totaled $1,293,300 and were all on account.   The total cost to manufacture
these goods according to their job cost sheets was $725,825.

Instructions:
Submit your assignment as an Excel spreadsheet with each tab labeled by item number. Demonstrate the following:
1. Prepare the journal entries to record the transactions for the year.
2. Prepare the T-accounts for raw materials inventory, work in process...

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