Langdon Company Manufactures Custom Designed Toy Sailboats

question 88

Essay

Langdon Company manufactures custom designed toy sailboats.The company uses a job order costing system.Overhead is applied based on direct labor hours.Estimated overhead for 2015 is $11,840 and the company estimates it will use 7,400 direct labor hours.The following events occurred in March.
(a.)The company purchased materials for $800 on account.
(b.)The production supervisor requisitioned 15 sheets of fiberglass for constructing the boats.The fiberglass was in stock and originally cost $3 a sheet.
(c.)Direct labor on the boats cost $500.
(d.)More materials were purchased for $350 on account.
(e.)Indirect labor costs were $210.
(f.)A utility bill for the boat factory was $230 and was paid in cash.
(g.)A repair bill for the salesman's car was $75 and will be paid next month.
(h.)Additional materials were placed into production which cost $215.
(i.)Manufacturing overhead was applied (direct labor during March totaled 500 hours).
(j.)One sailboat was completed which cost $325.
(k.)The completed sailboat was sold for $750.Record the sale and the cost of sale.
Required:
(1.)Determine the overhead application rate.
(2.)Prepare journal entries for the above transactions.
(3.)What is the cost of the remaining Work in Process?

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Definitions:

Intellectual Incompetence

A lack of intellectual capabilities to perform tasks or understand concepts that are typically within the average person's ability.

Pessimistic Outlook

An inclination to focus on the negative side of situations or to anticipate the most adverse events, indicating a dearth of belief or expectancy in positive future developments.

Oxytocin

A hormone and neurotransmitter involved in childbirth, lactation, and bonding, often dubbed the "love hormone."

Social-Bonding Hormone

Often refers to oxytocin, a hormone that plays a key role in facilitating social connections, trust, and attachment in mammals.