Accounting DATA: Targon, Inc., manufactures lawn equipment.

| January 31, 2017

Question
Accounting

DATA: Targon, Inc., manufactures lawn equipment. A job-order costing system is used, since the products are manufactured in batches rather than on a continuous basis. The company started operations on January 1, 2014. Operating activities during the first 11 months of the year (through November 30) resulted in the following balances in selected accounts:

RAW MATERIALS

Dr. Cr.

Balance 11/30/2014 36,000

MANUFACTURING OVERHEAD

Dr. Cr.

2,260,000*

Balance 12/31/2014 ?

WORK IN PROCESS

Dr. Cr.

Balance 11/30/2014. 1,210,000

COST OF GOODS SOLD

Dr. Cr.

Balance 11/30/2014 14,200,000

FINISHED GOODS

Dr. Cr.

Balance 11/30/2014 2,785,000

*This figure represents actual manufacturing overhead costs incurred through November 30, 2014 (11 months).

The following additional information is available on the company:

The Work in Process inventory at November 30 consisted of two jobs:
Total Cost
As of

Job No. Units Items November 30

1105

50000

Estate Sprinklers

$ 720,000

1106

40000

Economy Sprinklers

490,000

Total

$1,210,000

The Finished Goods Inventory at November 30 consisted of five separate items in stock:
Items Quantity and Unit Cost Total Cost

Estate Sprinklers

5,000 units at $22 each

$ 110,000

Deluxe Sprinklers

115,000 units at $17 each

1,955,000

Brass Nozzles

10,000 units at $14 per unit

140,000

Rainmaker Nozzles

5,000 units at $16 per unit

80,000

Connectors

100,000 units at $5 per unit

500,000

Total

$ 2,785,000

Manufacturing overhead cost is assigned to jobs on a basis of direct labor-hours. For 2014, management estimated that the company would work 400,000 direct labor-hours and incur $2,400,000 in manufacturing overhead cost.
A total of 376,000 direct labor-hours were worked during the first 11 months of the year (through November 30)
Items (e) through (j) below summarize the activity that took place in the company during December 2014.

A total of $708,000 in raw materials was purchased during the month
Raw materials were drawn from inventory and charged as follows:
1105

See above

$ 210,000

1106

See above

6,000

1201

30,000 rainmaker nozzles

181,000

1202

10,000 deluxe sprinklers

92,000

1203

50,000 ring sprinklers

163,000

Indirect Materials

30,000

Total

$ 682,000

The payroll during December was as follows:
Hours Total Cost

1105

6,000

$ 62,000

1106

2,500

26,000

1201

18,000

182,000

1202

500

5,000

1203

5,000

52,000

Indirect labor

8,000

85,000

Sales and admin.

—–

122,000

Total

$ 534,000

Other costs incurred in the factory during December were:
Depreciation

$ 62,500

Utilities

15,000

Insurance

1,000

Property Taxes

3,500

Maintenance

6,000

Total

$ 88,000

Jobs completed during December and the number of units transferred to the finished goods warehouse were:
Job No. Quantity Items

1105

50,000 units

Estate Sprinklers

1106

40,000 units

Economy Sprinklers

1201

30,000 units

Rainmaker Nozzles

1203

50,000 units

Ring Sprinklers

Finished products were sold and shipped to customers during December as follows:
Items Quantity

Estate Sprinklers

16,000 units

Deluxe Sprinklers

32,000 units

Economy Sprinklers

20,000 units

Ring Sprinklers

22,000 units

Brass Nozzles

5,000 units

Rainmaker Nozzles

10,000 units

Connectors

26,000 units

REQUIRED:

Determine the amount of under- or overapplied overhead for the year 2014 “and” the month of December 2014 . What is the appropriate accounting treatment for this under- or overapplied overhead balance? Explain your answer. Determine the dollar balance in the Work in Process Inventory account as of December 31, 2014. For each inventory item, determine the dollar balance in the Finished Goods Inventory account as of December 31, 2014. Assume a LIFO (Last-In; First-Out) flow of units.

Estate Sprinklers __________

Economy Sprinklers __________

Deluxe Sprinklers __________

Brass Nozzles __________

Rainmaker Nozzles __________

Connectors __________

Ring Sprinklers __________

Prepare an Income Statement for the month of December (2014). To calculate Sales Revenue assume that Targon, Inc. “marks up” its products at 30% above “adjusted” Cost of Goods Sold. Also, assume an income tax rate of 25%.

Get a 30 % discount on an order above $ 50
Use the following coupon code:
COCONUT
Order your essay today and save 30% with the discount code: COCONUTOrder Now
Positive SSL