The Collins Company Uses a Job-Order Costing System and Applies

question 7

Essay

The Collins Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of materials used in production.At the beginning of the most recent year,the following estimates were made as a basis for computing the predetermined overhead rate for the year:
Manufacturing overhead cost: $200,000
Direct materials cost: $160,000
The following transactions took place during the year (all purchases and services were acquired on account):
a.)Raw materials purchased: $86,000.
b.)Raw materials requisitioned for use in production (all direct materials): $98,000.
c.)Utility costs incurred in the factory: $15,000.
d.)Salaries and wages incurred as follows:
Direct labour: $175,000
Indirect labour: $70,000
Administrative salaries: $125,000
e.)Maintenance costs incurred in the factory: $15,000.
f.)Advertising costs incurred: $89,000.
g.)Depreciation recorded for the year: $80,000,of which 80% relates to factory assets and the remainder relates to selling and administrative assets.
h.)Rental cost incurred on buildings: $70,000 (75% of the space is occupied by the factory,and 25% is occupied by sales and administration).
i.)Miscellaneous selling and administrative costs incurred: $11,000.
j.)Manufacturing overhead cost was applied to jobs as per company policy.
k.)Cost of goods manufactured for the year: $500,000.
l.)Sales for the year (all on account): $1,000,000.These goods cost $600,000 to manufacture.
Required:
Prepare journal entries to record the information above.Key your entries by the letters a through l.

Be familiar with the tools and appendices within the CPT manual, including modifiers, and how they support accurate coding.

Distinguish between key components and contributory factors in decision-making related to coding.

Recognize the importance of accurately coding the nature of the presenting problem, as well as the provider's evaluation and management.

Know the process and importance of reviewing medical necessity guidelines and their role in coding.

---

Definitions:

Goods

Tangible products that are produced, bought, or sold, thereby contributing to an economy's exchange of value.

Services

Activities or benefits provided by one party to another which are intangible and do not result in ownership.

Employment Patterns

The trends or general tendencies in how people are employed, including permanency, sectors of employment, work hours, and conditions.

Charles Handy

A renowned Irish author and philosopher specializing in organizational behavior and management.