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:

Consume Goods

The act of using up goods and services for personal needs or consumption.

Save Money

The practice of reducing expenditures or setting aside funds to increase financial security or for future use.

Net Present Value

Net Present Value (NPV) is a financial metric that calculates the present value of all cash flows associated with a project, including both inflows and outflows, to determine its profitability.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.