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?

Question

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?

Quizplus · Accepted Answer

The Answer of 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?

Silverton Manufacturing Company Builds Highly Sophisticated Engine Parts for Cars