tony allan inc is a small manufacturer of metal

Question

Tony Allan Inc is a small manufacturer of metal products in Toronto.  The company rents its factory building.  It uses a job order costing system because it has a wide variety of products that receive varying attention and effort in the two factory departments, Machining and Assembly.  Tony Allen Company uses a perpetual inventory system.   Tony Allen Company had the following post-closing trial balance as of December 31, 2011:

101	Cash	$15,000
102	Accounts Receivable	40,000
103	Raw Materials Inventory	?
104	Goods in Process Inventory	4,000
105	Finished Goods Inventory	20,000
106	Unexpired Insurance	12,000
107	Office Equipment	20,000
108	Accumulated amortization - Office Equipment		$5,000
109	Factory Equipment	950,000
110	Accumulated Amortization - Factory Equipment		220,000
201	Accounts Payable		23,000
202	Wages and Salaries Payable		1,000
203	Accrued Utilities		2,000
204	Accrued Property Taxes		3,000
301	Capital Stock		100,000
302	Retained Earnings		?
		?	?

Goods in process:

Job order	Dep't	Direct	Direct	Factory	Total
Number		Materials	Labour	Overhead	Cost
100	Machining	$1,800.00	$800.00	$900.00	$3,500.00
	Assembly	$200.00	$200.00	$100.00	$500.00
					$4,000.00

Finished goods:

Stock #	Reference	Quantity	Unit Cost	Total Cost
X-1	Job 98	100.00	80.00	$ 8,000.00
X-2	Job 99	1,000.00	12.00	$12,000.00
				$20,000.00

Raw materials:

Code	Quantity	Unit Cost	Total Cost
A	4,000	?___(A)	?
B	10,000	?___(B)	?
C	400	?___(C)	?
Supplies	Various		$1,400.00
			?

 Labour costs and overhead costs:

 The hourly rate including benefits for machinists is $_____(D) and for assemblers is $______(E).

To cost jobs as they are worked on, a predetermined or budgeted overhead rate was computed for 2009 based on the following budgeted cost drivers:

            Machining department                       69,450 machine hours

            Assembly department                         $206,400 of direct labour

These overhead rates will be used throughout the year by each department.  (Note that applying factory overhead on the basis of machine hours is not something you have done before in this course.) All overhead will be applied to all jobs worked on during the year in proportion to the machine-hour and/or direct-labour cost devoted to each job.

This budget was prepared after careful consideration of the sales outlook for the coming year.  The forecasted budget consisted of the following items:

For The Year Ended December 31, 2011

		Machining	Assembly	Total
Variable costs:
	Supplies	$14,400	$5,400	$19,800
	Indirect Labour	22,800	16,800	39,600
	Utilities	30,000	9,000	39,000
	Repairs	24,000	6,000	30,000
	Misc.	19,920	12,336	32,256
		111,120	49,536	160,656
Fixed costs:
	Insurance	7,200	2,400	9,600
	Amortization	114,000	14,400	128,400
	Rent	24,000	16,800	40,800
	Property taxes	4,200	1,200	5,400
	Supervision	17,280	18,864	36,144
		166,680	53,664	220,344
Total Factory Overhead		$277,800	$103,200	$381,000
	FOH rate = budgeted FOH
	budgeted cost driver

TRANSACTIONS:

The following transactions occurred during the month of January 2012:

1.  Purchases of raw materials (on account):

				Units	$$
Receiving report #		1012	A	5,000	?
Receiving report #		1013	B	6,000	?
Receiving report #		1014	A	2,500	?
Receiving report #		1015	B	5,000	?
Receiving report #		1016	C	2,125	?
Receiving report #		1017	B	3,000	?
Receiving report #		1018	Supplies	N/A	$3,000.00

2. Assume that costs have not changed in the last year.

3. Returns on account:  50 units of material B.  (receiving report #1019)

4. The direct material requisitions were summarized, and the following data were shown on a material usage report.

Machining Department  Direct Material Usage

For the Month Ended January 31, 2012

Requisition	Type	Job Order	Quantity
M89	B	101	1,500
M90	A	102	3,000
M91	A	103	1,000
M92	B	103	1,000
M93	B	102	3,000
M94	B	101	200
M95	A	104	2,000

Assembly Department Direct Material Usage

For the Month Ended January 31, 2012

Requisition	Type	Job Order	Quantity
A301	C	100	5
A302	C	103	200
A303	C	101	800
A304	C	102	1,500
A305	C	103	20

5. A summary of payroll costs incurred as per the time tickets is as follows:

Actual Labour Hours Worked  For the Month Ended January 31, 2012

Work	Job
Ticket	Order	Machining	Assembly
ML480	101	4
ML481	101	300
ML482	103	200
ML483	102	240
ML484	104	100
ML485	103	20
AL60	100		4
AL61	102		1,400
AL62	101		100
AL63	103		200
AL64	102		40
Total direct labour		864	1,744

Other payroll costs:

		Machining	Assembly	Total
Indirect labour		$2,000	$1,500	$3,500
Factory Supervision		$1,200	$1,600	$2,800
Selling and admin. Wages				$6,000

(Only factory wages should be run through the factory payroll account, whereas the rest should go directly to Selling and Admin.)

6. Apply overhead to jobs.  See data for item 6 to obtain machine hours worked.  (A direct labourer operates more than one machine simultaneously, so machine hours are not necessarily equal to labour hours incurred by machinists.)

7. Use the following information to (a) record the completion and  (b) the saleof the items:

Tony Allen Inc Production and Sales Data

For the Month Ended January 31, 2012

Job #	Finished	Date	Mach	Stock	Invoice	Sold	Sales
	Units	Finished	Hours	Number	Number	Units	Revenue
98	100	Dec. 11/09	n/a	X-1	#923	100	$  9,300
99	1000	Dec. 15/09	n/a	X-2	#924	1,000	26,000
100	50	Jan. 5/10	0	X-3	#925	20	1,800
101	1750	Jan. 12/10	3,000	X-4	#926	900	24,400
102	1000	Jan. 19/10	2,000	X-5	#927	950	75,000
103	100	Jan. 30/10	150	X-6	#928	50	6,500
104	Unfinished		800
			5,950				$143,000

All sales are on account.

8. Gross payroll (factory and office) of $44,000 is paid in cash.

9. The following additional overhead costs were incurred during January:

				Selling
Item	Total	Machining	Assembly	& Admin.		Account to Credit
Supplies requisitioned	$2,000	$1,500	$400	$100		?
Utilities	4,000	2,700	800	500		Accrued utilities
Repairs by outsiders	3,000	2,350	600	50		A/P
Miscellaneous	3,000	2,000	900	100		A/P
Insurance	1,000	600	200	200		?
Amortization on equip.	11,000	9,500	1,200	300		?
Rent	4,000	2,000	1,400	600		A/P
Property taxes	500	350	100	50		Accr.prop. Taxes
	$28,500	$21,000	$5,600	$1,900

10. Utility bills received $2,900 (DR Accrued utilities and CR A/P).

11. Utility bills paid, $2,525.

12. Other selling and administrative expenses incurred, $15,000.

13. Other payments on account, $63,500.

14.  Collections on account, $99,000.

15. Close under- or over-applied Factory Overhead to Cost of Goods Sold.

REQUIRED:

1. Enter all starting balances in the GL and sub ledgers. You will need to calculate your raw materials inventory value (about $30,000) based on your assigned variables. Adjust retained earnings to balance the opening trial balance. Round all totals to the nearest dollar and all per unit numbers to two decimal places.
2. Journalize the above summary transactions, all dated January 31, 2012.(No new balance sheet accounts are required.You should need to add only the following temporary accounts: Revenue, Cost of Goods Sold, Selling & Administrative Expense, Factory Overhead, Factory Payroll.)
3. Post to the general ledger and sub ledgers for January 2010, using proper posting references. (It is recommended that you post as you go, especially for accounts that have sub ledgers.)
4. Prepare a trial balance as of January 31, 2012.
5. Prepare schedules that reconcile the raw materials, goods in process and finished goods sub ledgers with the general ledger accounts as of January 31, 2012.
6.  Prepare a manufacturing statement for January 2012.
7. Prepare an income statement and statement of retained earnings for January 2012.
8. Prepare a (classified) balance sheet as of January 31, 2012.
9. Prepare and post a closing entry (or entries) for the month end.
10. Order your submission as follows:

• §  Cover sheet with group members and your variables.
• §  Journal entries
• §  General ledger
• §  Sub ledgers
• §  Trial balance
• §  Account reconciliations