Question

Shannon Corporation manufactures custom cabinets for kitchens. It uses a normal costing system with two direct cost categories: direct materials and direct manufacturing labor; and one​ indirect-cost pool, manufacturing overhead costs. It provides the following information for 2017.

Actual direct materials used $75,000
Actual direct manufacturing labor costs paid in cash $55,000
Indirect materials used $3,500
Supervision and engineering salaries paid in cash $49,000
Plant utilities and repairs paid in cash $13,000
Plant Depreciation $11,000
Actual direct manufacturing labor-hours 3100 hours
Cost of individual jobs completed and transferred to finished goods $190,000
Cost of Good Sold $145,000
Budgeted manufacturing overhead costs $1,302,000
Budgeted direct manufacturing labor-hours 31,000 hours

Present journal entries; a) usage of direct and indirect materials, b) manufacturing labor incurred, c) manufacturing overhead costs incurred, d) allocation of manufacturing overhead costs to jobs, e) cost of jobs completed and transferred to finished goods, and f) cost of goods sold (assume the cost allocation base is direct labor hours).

Answer 1

Answer:

please find the answers below

Explanation:

Shannon corporation:

The inventory cycle of is composed of 3 phases:

1. Ordering / purchases

2. Production

3. Finished good / sales

The ordering phase is when the company orders goods and the time it takes to receive the raw materials.

The production phase is the work in process phase when the raw materials are converted into finished goods.

The finished goods/ sales phase is the time it takes to sell the goods that were manufactured.

Journal entries in a manufacturing company are used to record transactions. Adjusting journal entries are used to recognize costs and revenues in the correct period.  

Dr Work – In - process                            $75, 000

Cr Inventory- Direct materials                                   $75, 000

Recording actual direct materials used

Dr Wages Payroll                           $55, 500

Cr Cash /Bank                                            $55, 500

Recording direct labor wages incurred

Dr Manufacturing overhead          $3, 500

Cr Inventory- Indirect materials                  $3, 500

Recording the cost of indirect materials incurred

Dr Manufacturing overhead         $49, 000

Cr Cash/ Bank                                    $49, 000

Recording wages payable to supervisor and engineer

Dr Manufacturing overhead         $13, 000

Cr Cash/ Bank                                                 $13, 000

Plant utilities and repairs taken to manufacturing overhead

Dr Manufacturing overhead                $11, 000

Cr Accumulated depreciation – plant                 $11, 000

Record depreciation on factory plant

Dr Finished goods                                $190, 000

Cr Work – In – Process                                            $190, 000

Record of jobs completed (cost of goods manufactured)

Dr Work – in – process                       $76, 500

Cr Manufacturing overhead                                   $76, 500

Record overhead applied to production

[$3, 500 + $49, 000 + $13, 000 + $11, 000 = $76, 500]

Dr Cost of goods sold                         $145, 000

Cr finished goods                                                        $145, 000

Record cost of jobs or goods completed and sold