COST ACCOUNTING AND CONTROL LEARNING EVIDENCE 1 Submitted To: Leah May Mijares Santiago, CPA, PhD Submitted By: Lailee Jean Mogi COMA 3B 1. Journal Entries Transactions for October Debit 1. Raw Materials Inventory Accounts Payable To record the purchase of materials on account for Precast. 1,150,000 Work In Process – P Manufacturing Overhead – P Raw Materials Inventory 650,000 500,000 2. Manufacturing Overhead – C Accounts Payable To record utilities installed at the bridge site. 3. Manufacturing Overhead – P Cash To record rent paid for temporary construction site by precast dept. 4. No Journal Entries 5. Manufacturing Overhead – C Cash To record payment for machine rental expense 6. Raw Materials Inventory Accounts Payable To record the purchase of additional materials on account. 7. Work In Process – P Manufacturing Overhead – P Cash Accumulated Depreciation - P To record the payment of bills and depreciation under the Precast Dept. Work In Process – C Manufacturing Overhead – C Credit 1,150,000 1,150,000 25,000 25,000 5,000 5,000 60,000 60,000 1,485,000 1,485,000 45,000 36,320 66,120 15,200 16,300 18,650 26,200 Cash Accumulated Depreciation - P To record the payment of bills and depreciation under the Construction Dept. 8. Accounts Payable Cash To record payment for materials purchased in Oct. 1 and 6. 9. Work In Process – P Manufacturing Overhead – P (6,000 x 25) To record overhead applied to production in the Precast Dept. Work In Process – C Manufacturing Overhead – C (16,300 x 1.65) To record overhead applied to production in the Construction Dept. Transactions for November 1. Manufacturing Overhead – C Cash To record payment for crane rental 2. Work In Process – P Manufacturing Overhead – P Raw Materials Inventory To record materials issued to Precast Dept. 3. Manufacturing Overhead – P Cash To record rental payment for temporary site occupied by Precast Dept. 4. Work In Process – C Manufacturing Overhead – C Raw Materials Inventory 8,750 2,635,000 2,635,000 150,000 150,000 26,895 26,895 Debit Credit 5,000 5,000 825,000 175,000 1,000,000 5,000 5,000 200,000 225,000 425,000 To record materials issued to Construction Dept. 5. No Journal Entry 6. No Journal Entry 7. No Journal Entry 8. Work In Process – P Manufacturing Overhead – P Cash Accumulated Depreciation – P To record the payment of bills and depreciation under the Precast Dept. Work In Process – C Manufacturing Overhead – C Cash Accumulated Depreciation - P To record the payment of bills and depreciation under the Construction Dept. 9. Work In Process – P Manufacturing Overhead – P (3,950 x 25) To record overhead applied to production in the Precast Dept. 115,000 54,050 153,850 15,200 134,300 43,850 158,800 18,350 98,750 98,750 Work In Process – C Manufacturing Overhead – C (134,300 x 1.65) To record overhead applied to production in the Construction Dept. 10. Accounts Receivable Construction Revenue To record amount billed to state for the completed bridge. 221,595 Cost of Contracts Finished Work In Process To record the cost of completed jobs. 2,482,840 221,595 3,450,000 3,450,000 2,482,840 2. T – Accounts 3. Job Cost Sheet Job Cost Sheet - Precast Department Company Name: Lincoln Construction Company Description of Job: Construction of Calamus River Bridge Starting Date: October 1 Completion Date: November 7 Precast Department Direct Materials (estimated): $ 1,550,000 Date: Source: Direct Labor (estimated): $220,000 Cost: Date: Source: Cost: Manufacturing Overhead (estimated): $275,000 Date: Source: Cost: 10/1 Material issued for production $650,000 10/7 Paid Direct Labor $45,000 10/9 Paid Overhead Expenses $150,000 11/2 Material issued for production $825,000 11/8 Paid Direct Labor $115,000 11/9 Paid Overhead Expenses $98,750 $160,000 Total Cost: Total Cost: $ 1,475,000 Total Cost: Cost Summary Direct Materials Remarks $1,475,000 Direct Labor $160,000 Manufacturing Overhead $248,750 TOTAL COST $248,750 $ 1,883,750 Job Cost Sheet - Construction Department Company Name: Lincoln Construction Company Description of Job: Construction of Calamus River Bridge Starting Date: October 1 Completion Date: November 7 Construction Department Direct Materials Direct Labor Manufacturing (estimated): $ 350,000 (estimated): $ 130,000 Overhead (estimated): $ 214,500 Date: 11/4 Source: Cost: Material issued for production $200,000 Total Cost: $200,000 Date: Source: Cost: Date: Source: Cost: 10/7 Paid Direct Labor $16,300 10/9 Paid Overhead Expenses $26,895 11/8 Paid Direct Labor $134,300 11/9 Paid Overhead Expenses $221,595 $150,600 Total Cost: Total Cost: Cost Summary $248,490 Remarks Direct Materials $200,000 Direct Labor $150,600 Manufacturing Overhead $248,490 TOTAL COST $ 599,090 4. Discuss Lincoln Construction Company’s estimate relative to its actual costs. - Both the Precast and Construction Departments of Lincoln Construction company have overestimated the costs of their direct materials and direct labor. In terms of the Manufacturing overheads of each department, the Construction Department have underapplied their manufacturing overhead since the actual cost of the latter is higher than the applied/estimated overhead. Overall, Lincoln Construction Company overestimated their costs for both departments and they gained higher profit from the construction.