Aries Corporation manufactures eighteenth-century, classical-style furniture. It uses a job costing system that applies

Question

Aries Corporation manufactures eighteenth-century, classical-style furniture. It uses a job costing system that applies factory overhead on the basis of direct labor-hours, Budgeted factory overhead for the year 2014 was P1,235,475, and management budgeted 86,700 direct labor-hours. These transactions were recorded during August: a. Purchased 5,000 square feet of oak on account at P25 per square foot. b. Purchased 50 gallons of glue on account at P36 per gallon (indirect material) c. Requisitioned 3,500 square feet of oak and 30.5 gallons of glue for production d. Incurred and paid payroll costs of P187,900. Of this amount, P46,000 were indirect labor costs; direct labor personnel carned P22 per hour on average. e. Paid factory utility bill, P15,230 in cash. f. August's insurance cost for the manufacturing property and equipment was P3,500. The premium had been paid in March g. Incurred P8,200 depreciation on manufacturing equipment for August. h. Recorded P2.400 depreciation on an

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Answer: a Raw materials inventory 125000 To accounts payable 125000 b Indirect material inventory 1800 To accounts payable 1800 c Manufacturing overhead 1098 To Indirect material inventory 1098 Work-in-progress inventory 87500 To raw materials inventory 87500 d Direct labor 141900 Indirect labor 46000 To cash 187900 Work-in-progress inventory 141900 To direct labor 141900 Manufacturing overhead 46000 To Indirect labor 46000 e Utility expense 15230 To cash 15230 Manufacturing overhead 15230 To utility expense 15230 f Insurance expense 3500 To prepaid inusrance 3500 Manufacturing overhead 3500 To insurance expense 3500 g Depreciation expense 8200 To manufacturing equipment 8200 Manufacturing overhead 8200 To depreciation expense 8200 h Depreciation expense 2400 To administartive asset 2400 i Advertising expense 5500 To cash 5500 j Other factory overhead costs 13500 To cash 13500 Manufacturing overhead 13500 To other factory overheads 13500 k Selling and administrative expenses 13250 To selling and administrative payable 13250 l Work-in-progress inventory 91912.5 To manufacturing overhead 91912.5 m Finished goods inventory 146000 To work-in-progress inventory 146000 n Accounts receivables 132000 To sales 132000 Cost of goods sold 112000 To finished goods inventory 112000 Manufacturing overhead 4384.5 To cost of Goods sold 4384.5 Manufacturing overhead Indirect material 1098 Work-in-progress inventory 91912.5 Indirect labor 46000 Utility expense 15230 Insurance expense 3500

Predetermined rate	=estimated overhead cost/estimated labor hours
	=1235475/86700
	14.25

Cost of goods manufactured and sold

Beginning finished goods inventory			0
Beginning WIP inventory		0
Cost of goods manufactured during the month
Raw materials	87500
Labor	141900
Applied overhead	91912.5

Total cost		321312.5
less: ending WIP inventory		175312.5
Cost of goods manufactured			146000
Less: Ending finished invenory			34000
Cost of goods sold			112000

Income statement

Sales		132000
Less: cost of Goods sold	112000
Overapplied overhead adjusted to COGS	-4384.5
Adjusted cost of Goods sold		107615.5
Gross margin		24384.5
Less: operating vosts
Depreciation expense	2400
Advertising expense	5500
Misc selling and administrative expense	13250
Total opertaing costs		21150
Net operating income		3234.5

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Aries Corporation manufactures eighteenth-century, classical-style furniture

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Answer:
a	Raw materials inventory	125000
	To accounts payable		125000

b	Indirect material inventory	1800
	To accounts payable		1800

c	Manufacturing overhead	1098
	To Indirect material inventory		1098

	Work-in-progress inventory	87500
	To raw materials inventory		87500

d	Direct labor	141900
	Indirect labor	46000
	To cash		187900

	Work-in-progress inventory	141900
	To direct labor		141900

	Manufacturing overhead	46000
	To Indirect labor		46000

e	Utility expense	15230
	To cash		15230

	Manufacturing overhead	15230
	To utility expense		15230

f	Insurance expense	3500
	To prepaid inusrance		3500

	Manufacturing overhead	3500
	To insurance expense		3500

g	Depreciation expense	8200
	To manufacturing equipment		8200

	Manufacturing overhead	8200
	To depreciation expense		8200

h	Depreciation expense	2400
	To administartive asset		2400

i	Advertising expense	5500
	To cash		5500

j	Other factory overhead costs	13500
	To cash		13500

	Manufacturing overhead	13500
	To other factory overheads		13500

k	Selling and administrative expenses	13250
	To selling and administrative payable		13250

l	Work-in-progress inventory	91912.5
	To manufacturing overhead		91912.5

m	Finished goods inventory	146000
	To work-in-progress inventory		146000

n	Accounts receivables	132000
	To sales		132000

	Cost of goods sold	112000
	To finished goods inventory		112000

	Manufacturing overhead	4384.5
	To cost of Goods sold		4384.5

Manufacturing overhead

Indirect material	1098	Work-in-progress inventory	91912.5
Indirect labor	46000
Utility expense	15230
Insurance expense	3500
Depreciation	8200
Other factory overhead	13500
Cost of goods sold	4384.5