Stingray Ltd manufactures outboard motors and an assortment of other marine equipment. The company uses a job costing system and manufacturing overhead is applied on the basis of machine hours. Estimated manufacturing overhead for the year is $1464000 and management expect that 73,200 machine hours will be used.
The following events occurred in April:
(a) The firm purchased marine propellers from Peninsula Marine for $7830 on credit.
(b) A requisition was filed by the Gauge Department supervisor For 300 kilograms of clear plastic. The material was originally purchased for $0.60 per kilogram.
(c) The Motor Testing Department supervisor requisitioned 300 metres of electrical wire, which is considered an indirect material. The wire was purchased for $0.10 per metre.
(d) The month’s electricity bill of $800 was paid in cash.
(e) Direct labour costs incurred in April were $150 000.
(f) April’s insurance cost was Moo for insurance on the cars driven by sales personnel. The policy had been prepaid in March.
(g) Metal tubing costing $6000 was purchased on credit.
(h) A cash payment of $1700 was made on outstanding accounts payable.
(i) Indirect labour costs of $21,000 were incurred during April.
(j) Depreciation on equipment for April amounted to $14,000.
(k) Job number G22, consisting of 50 tachometers, was finished during April. The total cost of the job was $1100.
(l) During April. 7000 machine hours were used.
(m) Sales on credit for April amounted to $350,000. The cost of goods sold in April was $139,000.
Required:
1. Calculate the company’s predetermined overhead rate for the year.
2. Prepare journal entries to record the events listed above.
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