Maverick Manufacturing operates in a job-order costing environment employing JIT inventory practices. Direct labor is charged directly to the individual job cards (sheets) with an automatic charge for manufacturing overhead at 80% of direct-labor dollars.
Included within the recording of direct material and manufacturing overhead transactions in the manufacturing accounts are:
- the allocations of telephone, supplies, insurance, and property taxes expense to the manufacturing process
- recording the accrual and payment of direct labor, indirect labor, and offices wages and salaries
- payments of accounts payable, credit and cash sales, and collections of accounts receivable
- payments of short-term and long-term obligations and sale of obsolete manufacturing equipment
Students are required to periodically reconcile the difference between the balance of the subsidiary ledger for Job Cards and the Raw and In-Process Inventory general ledger account. Over- or under-applied overhead is closed to the Cost of Goods Sold account at the end of the accounting period.
At the end of each module, the students are required to print a trial balance and check their account balances against the “Check It Out Box”. This box contains the correct balances of several of the accounts that have had significant activity, or no activity, during this data entry period. The students may use their general journal and check figures to verify their work and if necessary locate any error/s and correct them.
After completing Modules 3 and 4, students will record the adjusting and closing entries. After the financial statements and selected documents have been printed, students can verify their work against the “Check It Out Box”, make corrections (if necessary), and use the documents to answer the Final Evaluation questions.
The evaluation questions can be graded electronically and submitted in printed form or e-mailed for recording. Key documents such as the income statement and balance sheet may be attached to the graded questions.