Managerial Accounting: Tools for Business Decision-Making, Third Canadian Edition
Weygandt, Kimmel, Kieso, Aly
Comm 305 Chapter 3 Review Questions 1. (a) Joe Delong is not sure about the dieren!e between between !ost a!!ounting and a !ost a!!ounting s"stem. #$plain the dieren!e to Joe. (b) %hat is an important important &eature o& a !ost !ost a!!ounting s"stem' . (a) Distinguish Distinguish between between the two t"pes o& !ost a!!ounting s"stems. (b) Can a !ompan" !ompan" use both t"pes o& !ost a!!ounting a!!ounting s"stems' s"stems' 3. %hat t"pe o& industr" industr" is liel" to use use a *ob+order !ost s"stem' ,ive some some e$amples. -. %hat t"pe o& industr" industr" is liel" to use use a pro!ess !ost !ost s"stem' ,ive some e$amples. 5. our roommate ass &or "our help in understanding the ma*or steps in the /ow o& !osts in a *ob+order !ost s"stem. denti&" the steps &or "our roommate. . 2 *ob+order !ost s"stem has three inventor" !ontrol a!!ounts. denti&" the !ontrol a!!ounts and their subsidiar" ledgers. . %hat sour!e do!uments are are used in a!!umulating dire!t labour !osts' 4. #ntries to 6anu&a!turing 7verhead are normall" made onl" dail".8 dail".8 Do "ou agree' agree' #$plain. 9. :on" 2ndres is !on&used about the sour!e do!uments used in assigning materials and labour !osts. denti&" the do!uments and give the entr" &or ea!h do!ument. 10. %hat is the purpose o& a *ob !ost sheet' 11. ndi!ate the sour!e do!uments that are used in !harging !osts to spe!i;! *obs. 1. #$plain the purpose and use o& a materials re
haira ?inne" ?inne" believes a!tual manu&a!turing overhead should be !harged !harged to *obs. Do "ou agree' %h" or wh" not' 1-. %hat relationshi relationships ps are are involved in !al!ulating a predetermine predetermined d overhead rate' 15. @ow !an "ou veri&" the agreement o& %or in Aro!ess nventor" and *ob !ost sheets' 1. :ina Aapadais Aapadais believes that the !ost o& goods manu&a!tured s!hedule in *ob+order !ost a!!ounting is the same as shown in Chapter . s :ina !orre!t' #$plain. 1. 2dib @addad is !on&used about under+ and over+applied over+applied manu&a!turing manu&a!tur ing overhead. De;ne the terms &or 2dib= and identi&" the balan!e in the manu&a!turing overhead a!!ount that is appli!able to ea!h term. 14. 2t the end o& the "ear= under+ under+ or over+applied over+applied overhead overhe ad is !losed to n!ome >ummar".8 s this !orre!t' & not= e$plain the !ustomar" treatment o& this amount.
ohnWi Wi l e y&Son sCana da,L t d .Unau t ho r i z edc op yi ng ,di s t r i bu t i on ,ort r a ns mi mi s s i o no ft h i sp agei sp r o hi bi t ed Sol ut i onsMa Manual©2011J 31
Managerial Accounting: Tools for Business Decision-Making, Third Canadian Edition
Weygandt, Kimmel, Kieso, Aly
ANSWE WERSTO QUESTI ONS a) Co s ta cc o un t i n gi n v ol v e st h eme as u r i n g,r e co r d i n g,a ndr e po r t i n go fp r o du ctc os t s .A c o s t 1. ( ac c ount i ngs y st em c ons i s t sofmanuf ac t ur i ngc os tac c ount st hatar ef ul l yi nt egr at edi nt ot he g en er a ll e dg ero fac o mp mp an y . ( b) Ani mpor t antf eat ur eo fac os tac c ount i ngs y s t em i st heus eofaper pe t uali n v ent or ys y s t em t hatpr o vi desi mmedi at e,upt odat ei nf or mat i onont hec os tofapr oduc t . a) Th et wo p r i n c i p alt y p es o fc o s ta c c o un t i n gs y s t e ms a ms r e :( 1 )j o bo r d erc o s ts y s t e m a nd 2. ( ( 2 )p r o c es sc os ts y s t e m.Und m. eraj o bo r d erc o s ts y s t e m,c m, o s t sa r ea s si g ne dt oe ac hj obo r bat c hofgoods ;a tal lt i meseac hj oborbat c hofgoodsc anbes epar at el yi dent i fi ed.Aj obor derc os ts ys t em meas ur esc os t sf oreac hc ompl e t edj ob,r at hert hanf ors ett i meper i ods .Uni t c os t sa r ede t er mi n edb ydi v i di n gt het o t a lc os to ft hej o bb yt henu mb mb ero fu ni t spr o du ced . Un de rapr o c es sc o s ts y s t em,pr oduc t r el at edc os t sar eac c umul at edb yoras s i gnedt o depar t ment sorpr oc es s esf oras etper i odoft i me.J obor derc os t i ngl endsi t s el ft os pec i fi c , s pec i al or dermanuf ac t ur i ngors er v i c i n gwhi l ep r o c es sc os t i ngi sbe t t ers ui t edt os i mi l ar ,l a r g ev o l u mep me r o du c t sa ndc o n t i n uo u sp r o ce s sma nuf a ct u r i n g.Uni tc os t si n a pr oc es sc os t i ng s y s t em ar e de t er mi ned b y di v i di ng t he t o t alpr oc es s i ng c os t sf orac er t ai n per i od o f t i meb yt henumberofuni t spr oduc eddur i ngt ha tt i me . ( b) Ac o mp an yma ma yu s eb o t ht y p e sofs y s t e ms ms .F ore x a mp mp l e ,Ge ne r a lMo t o r su s e sp r o c e s sc o s t i n g f ors t andar dmodel c ar sandj obor derc os t i ngf orc us t ommadev ehi c l es . obo r d erc os ts y s t em i sm mo os tl i k el yt obeus edb yac ompan yt hatr ec ei v e ss pec i alor der s ,or 3. Aj c us t o m bu i l ds ,orp r od uc eshe t er o gen eo usi t e msorp ms r o du ct s ;t ha ti s ,t hep r odu ctmanuf ac t ur edor t hes er v i c er ender edi st ai l or edt ot hec us t omerorc l i ent ’ sr eques t s ,needs ,ors i t uat i on.Ex ampl es o fi ndus t r i est ha tu sej ob or de rs y s t e msar ms ec us t o m ho meb me ui l d er s ,c o mmer mm c i alpr i nt i ngc ompani es , mo t i o np i c t u r ec o mp mp an i e s,c o ns t r u c t i o nc o nt r a ct or s ,r e pa i rs ho ps ,a c c ou nt i n ga nd l a wfi r ms , hos pi t al s ,s hi pbui l der s ,andar c hi t ec t s . o ces scos ts y s t em i smo mos tl i k e l yt ob eu sedb yman uf ac t ur i n gfi r mswi t hc on t i n uo uspr od uc t i on 4. Apr fl owsus ual l yf oundi nmas spr oduc t i on,as sembl yl i ne,l ar gev ol ume,uni f or m,orr el at i v el ysi mi l ar pr oduc ti ndus t r i es .Compani espr oduc i ngappl i anc es ,c hemi c al s ,phar mac eut i c al s ,r ubberandt i r es, pl as t i c s ,c ement ,pet r ol eum,andaut omobi l esut i l i z epr oc es sc os ts y st ems . emaj ors t ep si nt hefl o wof c os t si naj ob or derc os ts y s t e m ar e :( 1)a cc umul at i ngt h emanuf ac t ur i ng 5. Th c os t si nc ur r edand( 2)as s i gni ngt heac c umul at edc os t st owor ki npr oc es s .
6. Thet hr eei nv ent or yc ont r ol ac c ount sandt hei rs ubs i di ar yl edger sar e: Ra w mat er i al si n v ent or y —m —mat er i al si n v ent or yr ec or ds . Wor ki np r o ce s si n v en t o r y —j —j o bc os ts h ee t s . Fi n i s h edg oo dsi n v e nt o r y —fi —fi n i s h edg oo dsr e c or d s . 7. Thes our c edoc ument sus edi nac c umul at i ngdi r ec tl abourc os t sar et i met i c k et sandt i mecar ds . s ag r e e.En t r i e st oMa nu f a c t u r i n gOv e r h ea dar ea l s oma dep er i o di c a l l yd ur i n ga na cc o un t i n g 8. Di per i od.F ore x ampl e,t her ewi l lbeadj us t i ngent r i esf orf ac t or ydepr ec i at i on,pr oper t yt ax es ,a nd i n su r a nc e.
ohnWi Wi l e y&Son sCana da,L t d .Unau t ho r i z edc op yi ng ,di s t r i bu t i on ,ort r a ns mi mi s s i o no ft h i sp agei sp r o hi bi t ed Sol ut i onsMa Manual©2011J 32
Managerial Accounting: Tools for Business Decision-Making, Third Canadian Edition
9.
Weygandt, Kimmel, Kieso, Aly
Thes our c edoc umentf ormat er i al si st hema t er i al sr equi s i t i ons l i pandt hes our c edoc umentf or l abouri st het i met i c ket .Theent r i esar e: Mat er i al s Wo r ki nPr o c es sI n v en t o r y Ma nu f a c t u r i n gOv e r h ea d RawMat er i al sI n v ent or y
Labour XX XX XX
Wor ki nPr o ce s sI n v en t or y Ma nu f a c t u r i n gOv e r h ea d F ac t o r yL ab ou r
XX XX XX
ur po seo faj o bc os ts he eti st or e cor dt hec os t sas s i g ne dt oas pe ci fi cj oba ndt od et er mi n et he 10. Thep t ot al anduni tc os t soft hec ompl et edj ob.
11. Thes our c edoc ument sf orc har gi ngc os t st os pec i fi cj obsar emat er i al sr equi s i t i ons l i psf ordi r ec t mat er i al s ,t i met i c k et sf ord i r ec tl abour ,andt hepr edet er mi nedo ver headr at ef ormanuf ac t ur i ng o v e r h e a d . t e r i al sr equi s i t i ons l i pi sabus i nes sdoc umentus edasanaut hor i z at i ont oi s s uemat er i al s 12. Thema f r om i n vent or yt opr oduc t i on. I ti sappr o v edands i gnedb yaut hor i z edper s onnel s ot hatmat er i al sma ma y b er emo v edf r o mi n v ent or yan dc ha r ge dt op r od uc t i on ,t os pec i fi cj obs ,d ep ar t men t s ,o rp r oc es s es . Themat er i al sr equi s i t i ons l i pi st hebas i sf orpos t i ngt ot hemat er i al si nv ent or yr ec or dsandt ot hej ob c os ts hee t .
13. Di s agr ee.Ac t ualmanuf ac t ur i ngo v er headc anno tbede t er mi nedunt i lt heendofaper i odo ft i me. Cons equent l y ,t her ec oul dbeas i gni fi c antdel a yi nas s i gni ngo v er headandi nde t er mi ni ngt he t ot al c os toft hec ompl et edj ob. er el at i ons hi p sf orc ompu t i ngt hep r ede t er mi nedo v er h eadr at ear et hees t i mat eda nnu alo v er he ad 14. Th c o s t sa nda na ss o ci a t e da c t i v i t yb as es uc ha sd i r e c tl a bo urh ou r s .Th er a t ei sc omp ut e db y di v i di ngt hees t i mat edannual o ver headc os t sbyt hee xpec t edannual oper at i ngac t i v i t y . ypoi nti nt i me ,t hebal anc ei nWor ki nPr oc es sI nv e nt or ys houl dequalt hes um oft hec os t s 15. Atan s ho wnont hej obc os ts hee t sofunfi ni s hedj obs .Al t er nat i v el y ,pos t i ngt oWor ki nPr oc es sI n vent or y ma yb ec o mp mp ar e dwi t ht h es u mo ft h ep os t i n gst ot h ej o bc o s ts h ee t sf o re a c ho ft h ema nu f a c t u r i n g c o s te l e me me nt s . nai si nc or r ec t .Ther ei sadi ff er enc ei nc omput i ngt o t almanuf ac t u r i ngc os t s .I nj obor derc os t i ng, 16. Ti ma nu f a ct u r i n go v er he ada pp l i e di sus e d,wh er e asi nCha pt e r2 ,a ct u alma nu f a c t u r i n go v er h ead i sus ed. de r a pp l i e do v er h ea dme an st h att h eo v er h ea da ss i g nedt owor ki np r o ce ssi sl e s st h ant h e 17. Un o v er he adi n cu r r e d.Ov e r a ppl i e do v er h ea dme an st h att h eo v er h ea da s si g ne dt owo r ki np r o ce s s i sg r e at e rt h ant h eo v er h ea di n cu r r e d.Ma nu f a ct u r i n gOv e r h ea dwi l lh av ead ebi tb al a nc ewh en o v er headi sunder appl i edandac r edi tbal anc ewheno v er headi sov er appl i ed. de r -o ro v er a pp l i e do v er h eadi sno tc l o se dt oI n c omeSu mma mm r y . Th eb al a nc ei nMa nu f a ct u r i n g 18. Un Ov er headi sel i mi nat edt hr oughanadj us t i ngent r y .Under -oro ver appl i edov er headgener al l yi s c o ns i d er e dt ob ea na dj u s t me nto fCo s to fGo od sSo l d .
ohnWi Wi l e y&Son sCana da,L t d .Unau t ho r i z edc op yi ng ,di s t r i bu t i on ,ort r a ns mi mi s s i o no ft h i sp agei sp r o hi bi t ed Sol ut i onsMa Manual©2011J 33
rie& #$er!ises Arepare a /ow!hart o& a *ob+order s"stem= and identi&" transa!tions. #3+1 Re"es :ool Die begins operations on Januar" 1. e!ause i t does all the wor to !ustomer spe!i;!ations= the !ompan" de!ides to use a *ob+order !osting s"stem. Arepare a /ow !hart o& a t"pi!al *ob+order !ost a!!ounting s"stem with arrows showing the /ow o& !osts. denti&" the eight transa!tions. Arepare entries in a!!umulating manu&a!turing !osts. #3+ During Januar"= its ;rst month o& operations= Re"es :ool Die a!!umulated the &ollowing manu&a!turing !ostsE raw materials F5=000 on a!!ountG &a!tor" labour F=000= o& whi!h F5=00 relates to &a!tor" wages pa"able and F1=-00 relates to pa"roll ta$es pa"ableG and utilities pa"able F=000. Arepare separate *ournal entries &or ea!h t"pe o& manu&a!turing !ost. Arepare an entr" &or the assignment o& raw materials !osts. #3+3 n Januar"= Re"es :ool Die re
sing predetermined overhead rates. #3+ During the ;rst hop estimated manu&a!turing overhead !osts and a!tivit" in order to determine a predetermined overhead rate. 2t "ear end= overhead was over+applied b" F3=500. t has been de!ided this over+applied overhead is material at the end o& the "ear and the amount should be allo!ated among 10I wor+in+pro!ess= 5I ;nished goods= and the rest to the !ost o& goods sold. Arepare the ad*usting entr" to !lose out the over+applied overhead.
© 201 1 For I ns t ruct or Use Onl y
Raw Ma t er i al sI nvent or y ( 1)Pur chas es ( 4)Mat er i al s used
Wor ki nPr ocessI nvent or y ( 4)Di r ect ( 7)Costof ma t e r i a l s comused p l e t e dj o bs ( 5)Di r ectl abour used ( 6)Over head a ppl i e d
Fi ni shedGo odsI nvent or y ( 7)Costofcom- ( 8)Costofgoods p l e t e dj o bs s ol d
SOLU TI ONS TO BRI EF EXER CI SES BRI EF EXERCI SE31
37
Fact or yLabour ( 2)Factor yl abour ( 5)Fact oryl abour i nc ur r e d used
CostofGoodsSol d ( 8)Costofgoods s ol d
Ke yt oEn t r i e s:
Accumul at i on 1 .P ur c h a s er a wma t e r i a l s 2.I ncurf act or yl abour 3.I ncurmanuf act ur i ng ov er head
Manufact uri ngOver head ( 3)Depreci at i on ( 6)Over head I nsur ance a ppl i e d Repai r s ( 4 )I n di r e c t ma t e r i a l sus e d ( 5 )I n di r e c t l abourused
Assi gnment 4 .Ra wma t e r i a l sa r eu s ed 5.Fact or yl abouri sused 6.Over headi sappl i ed 7.Compl et edgoodsar er ec ogni z ed 8 .Co s to fg oo dss o l di sr e c og ni z e d
BRI EFEXERCI SE32 Jan.31 Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 000 Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 000 31 Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 000 Fact or yWagesPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 600 Empl oyerPayr ol lTaxesPayabl e. . . . . . . . . . . . . . . . . . 1, 400 31 Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 000 Ut i l i t i esPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 000 BRI EFEXERCI SE33 Jan.31 Wor ki nPr ocessI nvent or y( 1, 200+1, 500+900) . . . . 3, 600 Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 400 BRI EFEXERCI SE34 Jan.31 Wor ki nPr ocessI nvent or y( 1, 400+1 , 800+1 , 600) . 5, 600 Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 600 BRI EFEXERCI SE35
Dat e 1 / 3 1 1 / 3 1
Job1 Di r e ct Mat er i al s 1, 200
Di r e ct Labour 1, 200
Dat e 1 / 3 1 1 / 3 1
Dat e 1 / 3 1 1 / 3 1 Job3 Di r e ct Mat er i al s 900
Job2 Di r ec t Mat er i al s 1, 500
Di r ect Labour 1, 600
Di r ect Labour 1, 400
BRI EFEXERCI SE36 Di r e ctmat er i al+Di r e ctl a bour=Pr i mecost Di r ectmat er i al+Di r ectl abour+Appl i edMOH=Tot almanuf act ur i ngcost $4, 000+DL+. 75( $4, 000+DL)=$21, 000 Thus,DL=$8, 000; andMOH=. 75( $4, 000+$8, 000)=$9, 000 [ Pr oof :$ 4, 00 0+$8 , 0 00+$9 , 0 00=$2 1, 0 00 ] BRI EFEXERCI SE37 Jan.31 Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . ( $40, 000×90%)
36, 000 36, 000
Feb. 28 Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . ( $30, 000×90%)
27, 000 27, 000
Mar .31 Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . ( $50, 000×90%)
45, 000 45, 000
BRI EFEXERCI SE38 Dec.31 Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wor ki npr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . Cos tofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3, 500 350 875 2 , 2 75
Exercises Prepare E3-13 Toronto Inc., has accumulated the following costs for job 45-TF at June 1. journal Direct materials entries for manufacturin Direct labour ($14 per hr) g costs. Manufacturing overhead
$26,400 5,600 3,920
The company uses normal costing system and applies manufacturing overhead on the basis of direct labour costs. During June the company completed the job 45-TF by adding $4,000 for direct material and 200 direct labour hours. Instructions
(a) Prepare the proper entry to record the manufacturing costs for job 45 FT during month of June. (b) Prepare the proper entry to record to transfer costs of job 45-TF from the work process to finished goods.
Prepare E3-14 journal entries for manufacturin g costs.
Milner Manufacturing uses a job-order costing system. On May 1, the company has a balance in Work in Process Inventory of $3,200 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,200. During May, a summary of source documents reveals the following: Job Number
Materials Requisition Slips
Labour Time Tickets
429
$2,500
$2,200
430
3,600
3,000
431
4,400
General use
$10,500
7,600
$12,800
1,000
1,500
$11,500
$14,300
Milner Manufacturing applies manufacturing overhead to jobs at an overhead rate of 80% of direct labour cost. Job No. 429 is completed during the month. Instructions
(a) Prepare summary journal entries to record the: 1. requisition slips 2. time tickets 3. assignment of manufacturing overhead to jobs 4. completion of Job No. 429
(b) Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets.
Analyze a job E3-15 A job-order cost sheet for Rolen Company is shown below. cost sheet and prepare Job No. 92 entries for Date Direct Materials Direct Labour manufacturin g costs. Beginning Balance January 1
$ 3,925
8
6,000
Manufacturing Overhead
$ 6,000
$ 4,200
8,500
6,375
4,000
3,000
18,500
13,575
12 25
For 2,000 Units
2,000
27 11,925 Cost of completed job: Direct materials
$11,925
Direct labour
18,500
Manufacturing overhead
13,575
Total cost
$44,000
Unit cost ($44,000 / 2,000)
$
22.00
Instructions
(a) On the basis of the foregoing data, answer the following questions: 1. What was the balance in Work in Process Inventory on January 1 if this was the only
unfinished job? 2. If manufacturing overhead is applied on the basis of direct labour cost, what overhead rate was used in each year? (b) Prepare summary entries at January 31 to record the current year's transactions pertaining to Job No. 92. Analyze costs E3-16 of manufacturin g and determine missing amounts.
Manufacturing cost data for Pena Company, which uses a job-order cost system, are presented below. Case A
Case B
Case C
(a)
$ 78,000
$ 72,600
Direct labour
50,000
120,000
(h)
Manufacturing overhead applied
37,500
(d)
(i)
Total manufacturing costs
135,650
(e)
212,600
(b)
15,500
23,000
211,500
(f)
(j)
Direct materials used
Work in process 1/1/11 Total cost of work in process
Work in process 12/31/11 Cost of goods manufactured
Case A
Case B
Case C
(c)
11,800
(k)
193,200
(g)
222,000
Instructions
Indicate the missing amount for each letter. Assume that in all cases manufacturing overhead is applied on the basis of direct labour cost and the rate is the same. Calculate the E3-17 Millefeuille Company applies operating overhead to photocopying jobs on the basis of machine hours manufacturin used. It expects overhead costs to total $290,000 for the year and estimates machine usage at 125,000 g overhead hours. rate and For the year, the company incurs $295,000 of overhead costs and uses 130,000 hours. under- or over-applied Instructions overhead. (a) Calculate the service overhead rate for the year. (b) Calculate the amount of under- or over-applied overhead at December 31. (c) Assuming the under- or over-applied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.
Analyze a job E3-18 A job cost sheet of Nilson Company is given below. cost sheet and prepare an Job Cost Sheet entry for the Job No. 469 completed job. Item: White Lion Cages
Quantity: 2,000 Date Requested: 7/2
For: Tesla Company
Date Completed: 7/31
Date
Direct Materials
Direct Labour
Manufacturing Overhead
7/10
$ 825
15
$400
$560
22
350
490
500
700
12
900
24
1,600
27
1,500
31 Cost of completed job: Direct materials Direct labour Manufacturing overhead Total cost Unit cost Instructions
(a) Determine the source documents for direct materials, direct labour, and manufacturing overhead costs
assigned to this job. (b) Calculate predetermined manufacturing overhead rate. (c) Calculate the total cost and the unit cost of the completed job. (Round the unit cost to the nearest cent.) (d) Prepare the entry to record the completion of the job.
Prepare E3-19 Alberta Company uses a job-order costing system to measure, record, and report its product costs. The entries for company started the month of August with $2,300 of work in process, and cost of finished goods was manufacturin $2,620. During August the company added the following costs: g costs. Direct materials requisitions $2,670 Direct labour
1,120
Actual overhead
890
Applied overhead
910
Instructions
Journalize the above transactions during August. (Omit explanations.)
Prepare E3-20 Garnett Printing Corp. uses a job-order cost system. The following data summarize the operations related entries for to the first quarter's production: manufacturin g costs. 1. Materials purchased on account were $192,000, and factory wages incurred were $91,500. 2. Materials requisitioned and factory labour used by job were as follows:
Job Number
Materials
Factory Labour
A20
$ 33,240
$18,000
A21
42,920
24,000
A22
36,100
17,000
A23
41,270
25,000
General factory use
4,470
7,500
$158,000
$91,500
3. Manufacturing overhead costs incurred on account were $59,500. 4. Depreciation on machinery and equipment was $14,550. 5. The manufacturing overhead rate is 80% of the direct labour cost. 6. Jobs completed during the quarter were A20, A21, and A23.
Instructions
Prepare entries to record the operations summarized above. (Prepare a schedule showing the individual cost elements and total cost for each job in item 6.)
Prepare a cost E3-21 At May 31, 2012, the accounts of Hannifan Manufacturing Company show the following: of goods manufactured 1. May 1 inventories—finished goods $12,600, work in process $17,400, and raw materials $8,200. schedule and partial 2. May 31 inventories—finished goods $15,400, work in process $17,900, and raw materials $7,100. financial statements. 3. Debit postings to work in process were direct materials $54,200, direct labour $32,000, and manufacturing overhead applied $40,000. 4. Sales totalled $200,000.
Instructions
(a) Prepare a condensed cost of goods manufactured schedule. (b) Prepare an income statement for May through gross profit. (c) Provide the balance sheet presentation of the manufacturing inventories at May 31, 2012.
Calculate E3-22 Laubitz Company begins operations on April 1. Information from job cost sheets shows the following: work in Manufacturing Costs Assigned process and Job Number April May June Month Completed finished 10 $6,500 $4,400 May goods from job 11 4,100 3,900 $3,000 June cost
sheets.
Manufacturing Costs Assigned 12
1,200
April
13
4,700
3,400
June
14
5,400
3,600
Not complete
Each job was sold for 25% above its cost in the month following completion. Instructions
(a) Calculate the balance in Work in Process Inventory at the end of each month. (b) Calculate the balance in Finished Goods Inventory at the end of each month. (c) Calculate the gross profit for May, June, and July.
Prepare E3-23 Shown below are the job cost-related accounts for the law firm of De Witte, Ozols, and Morton and their entries for manufacturing equivalents: costs of Law Firm Accounts Manufacturing Firm Accounts services provided. Supplies Raw Materials Salaries Payable
Factory Wages Payable
Operating Overhead
Manufacturing Overhead
Work in Process
Work in Process
Cost of Completed Work
Cost of Goods Sold
Cost data for the month of March follow. 1. Purchased supplies on account $1,500. 2. Issued supplies $1,000 (70% direct and 30% indirect). 3. Time cards for the month indicated labour costs of $55,000 (75% direct and 25% indirect). 4. Operating overhead costs incurred for cash totalled $30,000. 5. Operating overhead is applied at a rate of 80% of direct lawyer cost. 6. Work completed totalled $70,000.
Instructions
(a) Journalize the transactions for March. Omit explanations.
(b) Determine the balance of the Work in Process account. Use a T account.
Determine E3-24 Pedro Morales and Associates, a CA firm, uses job-order costing to capture the costs of its audit jobs. cost of jobs There were no audit jobs in process at the beginning of November. Listed below are data concerning the and ending three audit jobs conducted during November: balance in Koppel Dupont Rojas work in progress and Direct materials $ 700 $ 400 $ 250 overhead Auditor labour costs $5,400 $6,600 $3,375 accounts. Auditor hours
72
90
40
Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $60 per auditor hour. The Koppel job is the only incomplete job at the end of November. Actual overhead for the month was $12,000. Instructions
(a) Determine the cost of each job. (b) Indicate the balance of the Work in Process account at the end of November. (c) Calculate the ending balance of the Overhead account for November. Determine the E3-25 Easy Decorating uses a job-order costing system to collect the costs of its interior decorating business. predetermine Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number d overhead of decorator hours incurred. Listed below are data for the current year: rate, apply Estimated overhead $840,000 overhead, and determine Actual overhead $861,000 whether the Estimated decorator hours 40,000 overhead was under- or Actual decorator hours 41,500 over-applied. The company uses Operating Overhead in place of Manufacturing Overhead. Instructions
(a) Calculate the predetermined overhead rate. (b) Prepare the entry to apply the overhead for the year. (c) Determine whether the overhead was under- or over-applied and by how much.
SOLUTI ONSTO EXERCI SES EXERCI SE313 ( a )J une 3 0 3 0 3 0
( b)J une30
Wor ki nPr oc es sI nv ent or y. . . . . . . . . . . . . . . . . . . . . RawMat er i al sI nvent or y. . . . . . . . . . . . . . . . .
4 , 00 0
Wor ki nPr oc es sI nv ent or y. . . . . . . . . . . . . . . . . . . . . Fact or yLabour( 200hour s×$14) . .
2 , 80 0
Wor ki nPr oc es sI nv ent or y. . . . . . . . . . . . . . . . . . . . . ( $2, 800×( $3, 9 20÷$5, 600) ) Manuf act ur i ngOver head. . . . . . . . . . . . . . . . .
1 , 96 0
4, 000 2, 800
Fi ni shedGoodsI nv ent or y. . . . . . . . . . . . . . . . . . . . . . 44, 680 Wor ki nPr ocessI nv ent or y. . . . . . . . . . . . . [ ( 26, 400+4, 000) +( 5, 600+2, 800) +( 3, 920+1, 960)
EXERCI SE314
1, 960 44, 680
( a ) Ma y3 1
Wor ki nPr oc es sI nv ent or y. . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . RawMat er i al sI nvent or y. . . . . . . . . . . . . . . . .
1 0, 5 00 1, 000
Wor ki nPr ocessI nv ent or y. . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . Fa ct or yLa bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12, 800 1, 500
31 Wor ki nPr ocessI nv ent or y. . . . . . . . . . . . . . . . . . . . . ( $12, 800×80%) Manuf ac t ur i ngOver hea d. . . . . . . . . . . . . . . .
10, 240
3 1
3 1
Fi ni s he dGoodsI nv ent or y. . . . . . . . . . . . . . . . . . . . . . Wor ki nPr ocessI nv ent or y. . . . . . . . . . . . . ( $ 2, 0 00+$ 2, 5 00+$ 2, 2 00+$ 1, 7 60 * )
* $ 2, 2 00×8 0%
11 , 500
1 4, 3 00
10, 240 8 , 46 0 8, 460
EXERCI SE314( Cont i nued) ( b) May 1Bal ance 31 31 31 May31Bal ance
Wor ki nPr ocessI nvent or y 3, 200 May31 1 0, 5 00 12, 800 10, 240 28, 280
8, 460
JobCostSheet s Job Begi nni ngWor k Di r ec t Di r ec t Manuf act ur i ng* No. I nPr ocess Mat er i al Labour Ov er head 430 431
$1, 20 0 0 $1, 20 0
$3, 600 4, 400 $8, 000
$3, 000 7, 600 $ 10 , 6 00
$ 2, 400 6, 080 $ 8, 480
Tot al $ 10 , 2 00 1 8, 080 $ 28 , 2 80
* Di r ectl abour×. 80 EXERCI SE315 ( a) 1. $14, 125,or( $3, 925+$6, 000+$4, 200) . 2 . La sty ea r7 0%,or( $ 4, 2 00÷$ 6, 0 00 ) ;t hi sy ea r7 5% ( e i t he r$ 6, 3 75÷$ 8, 5 00 or$3 , 0 00÷$ 4, 0 00) . ( b) Ja n.31 Wor ki nPr oce ssI nvent or y( 6, 600+2, 000) . Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . .
8, 000 8, 000
31 Wor ki nPr ocessI nve nt or y( 8, 500+4 , 00 0) 12, 50 0 Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Wor ki nPr ocessI nvent or y( 12, 50 0x 75 %) . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . .
12, 500
9, 37 5
31 Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . 44, 000 Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . .
9, 375 44, 000
EXERCI SE316 ( a )+$ 50 , 0 00+$ 37 , 5 00=$ 13 5, 6 50 ( a)=$48, 150 $ 13 5, 6 50+( b)=$ 21 1, 5 00 ( b)=$ 75, 850 $2 11, 5 00–( c)=$1 93, 2 00 ( c)=$18, 300 [ Not e:Thei ns t r uc t i onsi ndi c at et ha tma nuf a ct ur i ngov er he adi sa ppl i e dont heba si s ofdi r ectl abourcost ,and t he r at ei st he same i n al lcases.Fr om Case A, as t ude nts houl dnot et heov er he adr a t et obe7 5%,or( $ 37 , 5 00÷$ 50 , 0 00 ) . ] ( d)=. 75×$120, 000 ( d)=$ 90, 000 $78, 000+$120, 000+$90, 000=( e) ( e )=$288, 000 $2 88, 0 00+$ 15, 5 00=( f ) ( f )=$303, 500 $303, 500–$11, 800=( g) ( g)=$ 291, 700 [ Not e:( h)and( i )ar esol v edt oget her . ] ( i )=. 75( h) $72, 600+( h)+. 75( h)=$2 12, 600 1. 85 ( h)=$140, 000 ( h)=$ 80, 000 ( i )=$60, 000 ( j )=$212, 600+$23, 000 ( j )=$235, 600 $2 35, 6 00–( k)=$2 22, 0 00 ( k)=$13, 600
EXERCI SE317 ( a) $2. 32permachi nehour( $290, 000÷125, 000) . ( b) ( $295, 000)–( $2. 32×130, 000machi nehour s) $ 295 , 0 00–$ 30 1, 60 0=$ 6, 60 0ov er a ppl i ed ( c) Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6, 600 6, 600
EXERCI SE318 ( a) Thesour cedocument sar e: Di r ectmat er i al s—Mat er i al sr equi si t i onsl i ps. Di r e ctl a bour —Ti met i c ke t s . Manuf act ur i ngover head—Pr edet er mi nedover headr at e. ( b) Thepr edet er mi nedover headr at ei s140% ofdi r ectl abourcost .Forexampl e, on Jul y 15,t he comput at i on i s $560÷ $400= 140%.The same r esul ti s obt ai nedonJul y22and31. ( c) Thet ot alcosti s: Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4, 825 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 250 Manuf a ct ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 750 $7, 825 Theuni tcosti s$3. 91( $7, 825÷2, 000) . ( d) Jul y31 Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 825 Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . .
7, 825
EXERCI SE319 Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2, 670
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1, 120
2, 670 1, 120
EXERCI SE319( Cont i nued) Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Va r i ousAc count s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
890
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . .
910
8 90 910
EXERCI SE320 1. Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192, 000 Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fa ct or yWa ge sPa y abl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
192, 000
91, 500 9 1, 5 00
2. Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153, 530 Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 470 Raw Mat er i al sI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84, 000 7, 500
3. Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59, 500
4. Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumul at edDepr eci at i on—Machi ner y& Equi pment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14, 550
5. Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ma nuf a ct ur i ngOv er he ad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 80% ×$84, 000)
67, 200
158, 000
91, 500 59, 500
14, 550
6 7, 2 00
6. Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238, 030 Wor ki nPr oc es sI nv ent or y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 38 , 0 30
Comput at i onofcostofj obsfini shed: Job
Di r e ct Mat er i al s
Di r e ct Labour
Manuf act ur i ng Over head
A20 A21 A23
$ 33 , 2 40 4 2, 920 4 1, 270
$ 18 , 0 00 24, 000 25, 000
$ 14 , 4 00 1 9, 20 0 2 0, 00 0
Tot al $65, 64 0 8 6, 1 20 8 6, 2 70 $ 23 8, 0 30
EXERCI SE321 ( a)
HANNI FANMANUFACTURI NG COMPANY CostofGoodsManuf act ur edSchedul e Fort heMont hEndedMay31, 2012 Wor ki npr ocess,Ma y1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al sused. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $54, 200 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 000 Manuf act ur i ngover headappl i ed. . . . . . . . . . . . . . . . . . . . . . . . . . 40, 000 T ot a lma nuf a ct ur i ngc os t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T ot alc os tofwor ki npr oc es s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less:Wor ki npr ocess,May31. . . . . . . . . . . . . . . . . . . . . . . . . . . . Cos tofgoodsma nuf a ct ur e d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
( b)
$17, 400
1 26 , 2 00 14 3, 6 00 17, 900 $ 12 5, 7 00
HANNI FANMANUFACTURI NG COMPANY ( Pa r t i a l )I nc omeSt a t e me nt Fort heMont hEndedMay31, 2012 Sal es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costofgoodssol d Fi ni shedgoods,May1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12, 600 Costofgoodsmanuf act ur ed. . . . . . . . . . . . . . . . . . . . . 125, 700 Costofgoodsavai l abl ef orsal e. . . . . . . . . . . . . . . . 138, 300 Less:Fi ni shedgoods,May31. . . . . . . . . . . . . . . . . . 15, 400
$200, 000
Costofgoodssol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gr osspr ofit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXERCI SE321( Cont i nued)
122, 900 $77, 100
( c) In the May 31 balance sheet, the manufacturing inventories will be reported in current assets as follows: Finished goods.................................................... $1,!"" #or in process................................................... 1%,&"" 'aw materials....................................................... %,1""
EXERCI SE322 ( a) Wor ki nPr ocessI nvent or y Apr i l30 $10, 600 ( #10 :$6, 500+#11:$4, 100 ) May3 1 $18, 100 ( #11:$4, 100+$3 , 900+#1 3:$4, 700+#14:$5, 400 ) June30 $ 9, 00 0 ( #1 4, $5 , 40 0+$3 , 600) ( b) Fi ni shedGoodsI nvent or y Apr i l30 $1, 200 ( #12) May31 $10 , 900 ( #10) June30 $19, 10 0 ( #11,$11, 000+#13, $8, 100) ( c)Gr ossPr ofit Mont h
Job Number
Sa l e s ( 25% above
Costof GoodsSol d
Gr oss Profit
$1, 20 0 10, 90 0 19, 10 0
$ 300 2, 725 4, 775
cost)
May June Jul y
12 10 11/ 13
$1, 50 0 1 3, 6 25 2 3, 8 75
EXERCI SE323 ( a) 1
2
Suppl i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sPayabl e. . . . . . . . . . . . . . . .
1, 500
Wor ki nPr oc es s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oper at i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . Suppl i es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 00 300
1, 500
1, 000
EXERCI SE323( Cont i nued)
3
4
5
6
( b) 2. 3.
Wor ki nPr ocess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41, 250 Oper a t i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . 13, 750 Sal ar i esPay abl e. . . . . . . . . . . . . . . . . .
55, 000
Ope r a t i ngOv er hea d. . . . . . . . . . . . . . . . . . . . . . . . . . 3 0, 00 0 Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30, 000
Wor ki nPr ocess( $41, 250×8 0%) . . . . . 33, 000 Oper at i ngOver head. . . . . . . . . . . .
33, 000
CostofCompl et edWor k. . . . . . . . . . . . . . . . . . . 70, 000 Wor ki nPr oces s. . . . . . . . . . . . . . . . . .
70, 000
Wor ki nPr ocess 700 70, 000 41, 25 0
( 6)
5.
33, 00 0 4, 950
EXERCI SE324 ( a)
Koppel Di r ectmat er i al s $ 700 Audi t orl abourcost s 5, 400 Appl i edover head 4, 320 Tot alcost $10, 420
Dupont $ 400 6, 600 5, 400 $12, 400
Roj as $ 250 3, 375 2, 400 $6, 025
TOTAL
12, 120
( b)TheKoppe lj obi st heonl yi nc ompl e t ej ob,t her e f or e,$ 10 , 4 20 . ( c)Act ua lover he ad Appl i edover head Ba l ance
$12, 000( DR) 12, 120( CR) $ 120( CR)Over appl i ed
EXERCI SE325 ( a)Pr edet er mi nedover headr at e=Est i mat edover head÷Es t i ma t e d decor at orhour s =$840, 000÷ 40, 000decor at orhour s =$21perdecor at orhour
( b) Wor ki nPr ocess( 41, 500hr s×$21) . . . . . . . . . . . . . . . . . . . . . 871, 500 Oper at i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871, 500 ( c) Act ualover head Appl i edover head Bal ance
$861, 000 871, 500 $10, 500Ov er appl i ed
Problems: Set A Calculate the P3-26A The consulting firm CMA Financial employs 40 full-time staff. The estimated compensation per predetermine employee is $105,000 for 1,750 hours. It charges all direct labour costs to clients. It includes any other d overhead costs in a single indirect cost pool and allocates them based on labour hours. Actual indirect costs were rate and job $850,000. Estimated indirect costs for the coming year are $1,400,000. The firm expects to have 60 costs for a clients in the coming year. service Instructions organization. (a) Determine overhead rate per direct labour hour. (b) Determine the direct labour rate per hour. (c) Calculate the total cost of a job that will take 270 direct labour hours, using a normal cost system. Prepare P3-27A entries in a joborder cost system and job cost sheets.
Bertrand Manufacturing uses a job-order cost system and applies overhead to production on the basis of direct labour costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $30,000, direct labour $15,000, and manufacturing overhead $20,000. As of January 1, Job No. 49 had been completed at a cost of $120,000 and was part of finished goods inventory. There was a $25,000 balance in the Raw Materials Inventory account. During the month of January, Bertrand Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $152,000 and $198,000, respectively. The following additional events occurred during the month: 1. Bertrand purchased additional raw materials of $100,000 on account.
2. It incurred factory labour costs of $75,000. Of this amount, $18,000 related to employer payroll
taxes. 3. It incurred manufacturing overhead costs as follows: indirect materials $18,000, indirect labour $17,000, depreciation expense $14,000, and various other manufacturing overhead costs on account $22,000. 4. It assigned direct materials and direct labour to jobs as follows: Job No.
Direct Materials
Direct Labour
50
$12,000
$ 7,000
51
42,000
28,000
52
35,000
22,000
Instructions
(a) Calculate the predetermined overhead rate for 2012, assuming Bertrand Manufacturing estimates total manufacturing overhead costs of $1,500,000, direct labour costs of $750,000, and direct labour hours of 20,000 for the year. (b) Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50. (c) Prepare the journal entries to record the purchase of raw materials, the factory labour costs incurred, and the manufacturing overhead costs incurred during the month of January. (d) Prepare the journal entries to record the assignment of direct materials, direct labour, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary. (e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.
Prepare entries in a joborder cost system and partial income statement.
(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month. (g) Calculate the balance in the Finished Goods Inventory account at the end of the month. What does this balance consist of? (h) Calculate the amount of under- or over-applied overhead. P3-28A For the year ended December 31, 2012, the job cost sheets of DeVoe Company contained the following data: Job Number 7640
7641
7642
Explanation
Direct Materials
Direct Labour
Manufacturing Overhead
Total Costs
Balance 1/1
$25,000
$24,000
$28,800
$77,800
Current year's costs
30,000
36,000
43,200
109,200
Balance 1/1
11,000
18,000
21,600
50,600
Current year's costs
43,000
48,000
57,600
148,600
Current year's costs
48,000
55,000
66,000
169,000
Other data: 1. Raw materials inventory totalled $15,000 on January 1. During the year, $140,000 of raw materials
were purchased on account. 2. Finished goods on January 1 consisted of Job No. 7638 for $87,000 and Job No. 7639 for $92,000.
3. Job No. 7640 and Job No. 7641 were completed during the year. 4. Job Nos. 7638, 7639, and 7641 were sold on account for $530,000. 5. Manufacturing overhead incurred on account totalled $120,000. 6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labour $20,000, and
depreciation on factory machinery $8,000. Instructions
(a) Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. Hint: Use a single T account for Work in Process Inventory. Calculate each of the following, then post each to the T account: 1. beginning balance 2. direct materials 3. direct labour 4. manufacturing overhead 5. completed jobs
(b) Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold. (c) Determine the gross profit to be reported for 2012.
Prepare P3-29A entries in a job-order cost system and a cost of goods manufactured schedule.
Enos Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fibreglass, and lumber, depending on customer preference. On June 1, 2012, the general ledger for Enos Inc. contains the following data: Raw Materials Inventory Manufacturing Overhead Applied
$ 4,200 32,640
Work in Process Inventory Manufacturing Overhead Incurred
Subsidiary data for Work in Process Inventory on June 1 are as follows: Job Cost Sheets
Customer
5,540 31,650
Job Cost Sheets Cost Element
Fowler
Haines
Krantz
$ 600
$ 800
$ 900
Direct labour
320
540
580
Manufacturing overhead
400
675
725
$1,320
$2,015
$2,205
Direct materials
During June, raw materials purchased on account were $3,900, and all wages were paid. Additional overhead costs consisted of depreciation on equipment of $700 and miscellaneous costs of $400 incurred on account. A summary of materials requisition slips and time tickets for June shows the following: Customer Job
Materials Requisition Slips
Time Tickets
Fowler
$ 800
$ 450
Farkas
2,000
800
Haines
500
360
Krantz
1,300
1,600
Fowler
300
390
$4,900
$3,600
1,500
1,200
$6,400
$4,800
General use
Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labour cost. The patios for customers Fowler, Haines, and Krantz were completed during June and sold for a total of $18,900. Each customer paid in full. Instructions
(a) Journalize the June transactions for the following: 1. purchase of raw materials, factory labour costs incurred, and manufacturing overhead costs
incurred 2. assignment of direct materials, labour, and overhead to production 3. completion of jobs and sale of goods
(b) Post the entries to Work in Process Inventory. (c) Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs. (d) Prepare a cost of goods manufactured schedule for June. Calculate the P3-30A Nicole Limited is a company that produces machinery to customer orders, using a normal job-order cost predetermine system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate d overhead is set at the beginning of each fiscal year byforecasting the year's overhead and relating it to direct rate and labour costs. The budget for 2012 was as follows: proration of Direct labour $1,800,000 overhead.
Manufacturing overhead
900,000
As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $110,000, and 1819C, with total direct labour charges of $390,000. On these jobs, machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $220,000, and for 1819C they amounted to $420,000. Total charges to the Manufacturing Overhead Control account for the year were $897,000, and direct labour charges made to all jobs amounted to $1,583,600, representing 247,216 direct labour hours. There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory account showed a balance of $720,000. Sales for the year amounted to $6,201,355; cost of goods sold totalled $3,935,000; and sales, general, and administrative expenses were $1,857,870. The above amounts for inventories and the cost of goods sold have not been adjusted for any over- or under-application of manufacturing overhead to production. It is the company's practice to allocate any over- or under-applied overhead to inventories and the cost of goods sold. Instructions
(a) Calculate the under- or over-applied manufacturing overhead for 2012. (b) Prorate the amount calculated in (a) based on the ending balances (before prorating) of Work in Process, Finished Goods, and Cost of Goods Sold. (c) Prepare an income statement for the company for the year. The income tax rate is 40%. (adapted from CMA Canada)
Analyze a job- P3-31A order cost system and calculate work in process.
On November 30, 2012, there was a fire in the factory of Able Manufacturing Limited, where you work as the controller. The work in process inventory was completely destroyed, but both the materials and finished goods inventory were undamaged. Able uses normal job-order costing and its fiscal year end is December 31. Selected information for the periods ended October 31, 2012, and November 30, 2012, follows:
October 31, 2012
November 30, 2012
$ 79,250
$ 73,250
Work in process inventory
58,875
?
Finished goods inventory
60,000
63,000
576,000
656,000
17,960
53,540
129,500
163,300
$128,700
?
Supplies (including both direct and indirect materials)
Cost of goods sold (year to date) Accounts payable (relates to materials purchased only) Manufacturing overhead incurred (year to date) Manufacturing overhead applied Other information for November 2012: Cash payments to suppliers Payroll (including $15,375 indirect)
$ 60,000 83,500
Indirect materials used
5,848
Over-applied overhead (during November only)
2,750
Instructions
Calculate the normal cost of the work in process inventory lost during the fire. (adapted from CGA-Canada)
Prepare T P3-32A Information for Merit Manufacturing Ltd. at May 1, 2012, is given below: accounts in a Inventories: comprehensive manufacturing Raw materials (all direct) job-order cost
$3,500
system and compare process costing.
Work in process
2,040
Finished goods
2,890
Transactions in May 2012: 1. Purchased $22,400 of direct materials on account. 2. Transferred $18,800 of direct materials into production. 3. Production wages totalled $6,500, of which direct labour accounted for $5,000. 4. The salary in May for the production supervisor was $3,000. 5. The total utility cost was $520, of which $410 was variable and $110 was fixed. 6. Transferred $1,300 of indirect material from factory supplies into production. 7. Depreciation on factory assets for May was $22,500. 8. Amortization of prepaid insurance on factory assets was $1,600.
Other information: The company transfers actual overhead costs during each month to the work in process inventory account. It uses separate accounts to record the incurrence of fixed and variable overhead. ii. During May, goods with a value of $52,450 were completed and transferred to finished goods. iii. During May, finished goods with a value of $51,315 were sold on account for $74,670. i.
Instructions
(a) Using T accounts, show the flow of costs into and out of the Factory Overhead, Inventory, and Cost of Goods Sold accounts for the month of May. Also calculate the value of each of the materials, work in process, and finished goods inventories at the end of May 2012. Be sure to use separate accounts as necessary. (b) Name an industry or product for which job-order costing would be appropriate and one for which process costing would be appropriate. Identify four differences between the production processes for job-order and process costing. (adapted from CGA-Canada)
Prepare P3-33A Red Fire Inc. produces fire trucks. The company uses a normal job-order costing system to compute its entries and cost of goods manufactured. The company's policy is to price its job at cost plus 30% markup. On close out January 1, 2012 there was only one job in process with the following costs: under- or Job 200 over-applied overhead Direct materials $13,500 Direct labour
$18,000
Applied overhead
$27,000
Total
$58,500
The following balances were taken from the general ledger of the company as of January 1, 2012: Direct materials inventory
$45,000
Finished goods inventory (for Job 100)
$85,000
During the year 2012, the following events occurred: Direct materials were purchased on account for $375,000 Two more jobs were started: Job 300 and Job 400. Direct materials and direct labour costs incurred by each job in process during the year 2012 are as follows: Job 200
Job 300
Job 400
Direct materials
$150,000
$45,000
$35,000
Direct labour
$130,000
$45,000
$25,000
The company incurred the following actual factory overhead during the year: Factory rent
$135,000
Factory supplies
$ 55,500
Indirect labour
$ 85,750
Jobs 200 and 300 were completed. Jobs 100 and 200 were sold. Instructions
(a) Calculate the total applied overhead for the year 2012. The factory overhead costs are applied to each job on the basis of direct labour dollars. (b) Prepare simple job-order cost sheets for jobs 200, 300 and 400 for the year ended December 31, 2012. (c) Determine whether the overhead is over-applied or under-applied. By how much? (d) Prepare a schedule of Cost of Goods Sold, identifying both normal and adjusted cost of goods sold,
for the year ended December 31, 2012. (e) Compute the selling price of Job 200. (f) Compute the ending balances as of December 31, 2012, for the following accounts: direct materials and work-in-process.
Analyze P3-34A Vargas Corporation's fiscal year ends on June 30. The following accounts are found in its job-order cost manufacturing accounting system for the first month of the new fiscal year: accounts and Raw Materials Inventory determine missing July 1 Beginning balance 15,000 July 31 Requisitions (a) amounts. 31 Purchases 90,400 July 31
Ending balance
(b) Work in Process Inventory
July 1
Beginning balance
31
Direct materials
31
Direct labour
31 Overhead July 31
Ending balance
(c)
July 31 Jobs completed
(f)
75,000 (d) (e) (g) Finished Goods Inventory
July 1
Beginning balance
(h)
31
Completed jobs
(i)
July 31
Ending balance
(k)
July 31 Cost of goods sold
(j)
Factory Labour July 31
Factory wages
(l)
July 31 Wages assigned
(m)
Manufacturing Overhead July 31
Indirect materials
9,000
31
Indirect labour
16,000
31
Other overhead
(n)
July 31 Overhead applied
114,000
Other data: 1. On July 1, two jobs were in process: Job No. 4085 and Job No. 4086, with costs of $19,000 and
$13,200, respectively. 2. During July, Job Nos. 4087, 4088, and 4089 were started. On July 31, only Job No. 4089 was unfinished. This job had charges for direct materials of $2,000 and direct labour of $1,500, plus manufacturing overhead. Manufacturing overhead was applied at the rate of 125% of direct labour cost. 3. On July 1, Job No. 4084, costing $145,000, was in the finished goods warehouse. On July 31, Job No. 4088, costing $138,000, was in finished goods. 4. Overhead was $3,000 under-applied in July.
Instructions
List the letters (a) through (n) and indicate the amount pertaining to each letter. Show calculations.
SOLUTI ONSTO PROBLEMS:SETA PROBLEM 326A
(a) *otal estimated indirect costs + stimated direct labour hours (!" employees - 1,%" hours per employee) verhead rate per direct labour hour (b) *otal estimated labour costs per employee + stimated direct labour hours per employee 0irect labour rate per hour
(c) *otal cost per hour ($/"."" 2 $"."") - *otal number of direct labour hours *otal cost of the 4ob (rounded)
$1,!"",""" %",""" $ /"."" $ 1",""" 1,%" $ ".""
$ "."" /%" $/1,""
PROBLEM 327A ( a )$ 1, 5 00 , 0 00÷$ 75 0, 0 00di r e ctl a bourc os t s=2 00 % ofdi r e ctl a bourc os t s ( b) Se es ol ut i ont opa r t( e )f orj obc os ts he et s ( c) Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100, 000 Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100, 000 Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 000 Fact or yWagesPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Empl oyerPayr ol lTaxesPayabl e. . . . . . . . . . . . . . . . . . . . . . . .
57, 000 18, 000
Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71, 000 Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumul at e dDepr eci at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22, 000 14, 000 18, 000 17, 000
( d) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89, 000 Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $ 12 , 0 00+$ 42 , 0 00+$ 35 , 0 00 )
89, 000
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57, 000 Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $ 7, 0 00+$ 28 , 0 00+$ 22 , 0 00 )
57, 000
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114, 000 Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114, 000 ( $ 57 , 0 00×2 00 % ofdi r e ctl a bourc os t s ) ( e) Seenextpagef orpost i ngst oj obcostsheet s.
PROBLEM 327A( Cont i nued) ( b) &( e)
JobCostSheet s
JobNo.50 Dat e
Di r ectMat er i al s
Di r ect Labour
Manuf act ur i ngOver head
Beg. Jan.
$ 30 , 0 00 12 , 0 00 $ 42 , 0 00
$ 15 , 0 00 7, 000 $ 22 , 0 00
* $ 20 , 0 00* * 14 , 0 00 * * $ 34 , 0 00*
Costofcompl et edj ob Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 000 Manuf a ct ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34, 000 Tot alcost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $98, 0 00 * $ 7, 0 00×2 00 % JobNo.51 Dat e
Di r ectMat er i al s
Di r ect Labour
Manuf act ur i ngOver head
Jan.
$42, 000 $ 42 , 0 00
$ 28 , 0 00 $ 28 , 0 00
* * $5 6, 0 00* * * * $ 56 , 0 00* *
Costofcompl et edj ob Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 42, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 000 Manuf a ct ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 000 Tot alcost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$126, 0 00 * * $ 28 , 0 00×2 00 % JobNo.52 Dat e
Di r ectMat er i al s
Jan. $35, 000 * * * $ 22 , 0 00×2 00 %
Di r ect Labour
Manuf act ur i ngOver head
$22, 000
* * * $44, 000* * *
PROBLEM 327A( Cont i nued) Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224, 000 Wor ki nPr oc essI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 000) ( $98, 000+$126,
22 4, 0 00
( f ) CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218, 000 Fi ni s he dGoodsI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $ 12 0, 0 00+$ 98 , 0 00 )
21 8, 0 00
Account sRecei vabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350, 000 Sal es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $ 15 2, 0 00+$ 19 8, 0 00 )
350, 000
( g)
Fi ni s he d GoodsI nvent or y Begi nni ngbal ance 120, 000 218, 000 Costofj obs49a nd50sol d Costofcompl et edj obs50and51 224, 000 Endi ngbal ance 126, 000
Thebal ancei nt hi saccountconsi st soft hecostofcompl et ed Job No.51 whi chhasnotyetbeensol d. ( h) Manuf act ur i ngOver head Act ual Appl i e d 7 1, 0 00 1 14 , 0 00 4 3, 000 The bal ance i ndi cat es t hatmanuf act ur i ng over head was over appl i ed by $ 43 , 0 00 .
PROBLEM 328A
( a)
Wor ki nPr ocessI nvent or y 1/ 1 Bal ance( 1) 128, 400 Compl et edwor k( 5)( c) Di r ectmat er i al s( 2) 121, 000 Di r ectl abour( 3) 139, 000 Manuf act ur i ngover head( 4)166, 800 12/ 31 Bal ance 169, 000
386, 200
( 1) Job7 640 Job764 1
$77, 800 50 , 6 00 $ 12 8, 4 00
( 3) Job7640 Job764 1 Job764 2
$36, 000 4 8, 000 55 , 00 0 $ 13 9, 0 00
( 2) Job7 640 Job764 1 Job764 2
$30, 000 43 , 0 00 48 , 0 00 $ 12 1, 0 00
( 4) Job7640 Job764 1 Job764 2
$43, 200 5 7, 600 66 , 00 0 $ 16 6, 8 00
( 5)
Job7640 Begi nni ngbal ance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Job764 1 Begi nni ngbal ance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot alcostofcompl et edwor k Job7640. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7641. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$77, 800 30, 000 36, 000 43, 200 $ 18 7, 0 00
$50, 600 43, 000 48, 000 57, 600 $ 19 9, 2 00 $187, 000 199, 200 $ 38 6, 2 00
Wor ki npr ocessbal ance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unfini shedj obNo.7642. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$169, 000 $169, 000*
* Cur r enty ea r ’ sc os t Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55, 000 Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . 66, 000 $ 16 9, 0 00 ( b) Act ualover headcost s I ncur r edonaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I ndi r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I ndi r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depr eci at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appl i edover headcost s Job7640. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7641. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7642. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Act ualover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Over appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf a ct ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 800 CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( c) Sal es( gi ven) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costofgoodssol d Job7638. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7639. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7641. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less:Over appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . Gr osspr ofit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$120, 000 14, 000 20, 000 8, 000 $ 16 2, 0 00 $ 43, 200 57, 600 66, 000 $ 16 6, 8 00 $162, 000 166, 800 $ 4, 800
4, 800 $530, 000
$87, 000 92, 000 199, 200 3 78 , 2 00 4, 800
373, 400 $156, 600
PROBLEM 329A ( a) ( 1) Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3, 900 3, 900
Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4, 800
Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumu mul at edDepr eci at i on—Equi pme ment . . . . . . . . . . . Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1, 100
( 2) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4, 900 1, 500
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3, 600 1, 200
Wor ki nPr ocessI nv ent or y( $3, 600×1. 25 ) . . . . . . . . . . . . . . . Manuf act ur i ngOv er head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4, 500
4, 800 700 400
6, 400
4, 800
( 3) Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 740 Wor ki nPr ocessI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Job Fowl wl er Hai nes Kr ant z
Di r ec t Mat er i al s $ 1, 7 00 1, 300 2, 200
Di r e ct Manuf act ur i ng Labour Over head* $ 1, 1 60 900 2, 180
$ 1, 4 50 1, 1 25 2, 7 25
4, 500 14, 740
T o t a l Cost s $ 4, 31 0 3, 325 7, 105 $ 14 , 7 40
* 125% ×di r ectl abouramo mount Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 9 00 Sal es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18, 900
CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 740 Fi ni shedGoodsI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14, 740
PROBLEM 329A( Cont i nued) ( b)
Wor ki nPr ocessI nvent or y 6/ 1 Bal ance 5, 540 June Compl et edwor k Di r ectmat er i al s 4, 900 Di r ectl abour 3, 600 Over heada ppl i ed 4, 500 6/ 30 Bal ance 3, 800
14, 740
( c ) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3, 800 J ob:Fa r k as( Di r ec tma t e r i a l s$2 , 0 00+Di r ec tl abour$8 00+ Ma nuf a ct ur i ngov er he ad$1 , 0 00 ( 8 00 x1 . 2 5) ) . . . . . . . . . . . . . . . . . $3, 800 ( d)
ENOSI NC. CostofGoodsManuf act ur edSchedul e Fort heMont hEndedJune30,2012 Wor ki npr ocess,June1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al sused. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover headappl i ed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . T ot almanuf ac t ur i ngcost s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T ot alcostofwor ki npr ocess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Le ss :Wor ki npr oc es s,June3 0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cos tofgoodsmanuf a ct ur e d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5, 540 $4, 900 3, 600 4, 500 13, 000 18, 540 3 , 8 00 $1 4, 7 40
PROBLEM 330A
(a)
verh v erhead ead rate rate 5 $&" $&""," ",""" "" + $1, $1,"", "",""" """ 5 "6 "6 of each each labou labourr $ 7ow calculate under8 or over8applied overhead for the year. 9ctual verhead(given) verhead applied($1,3,"" - "6) ;nder8applied overhead
$&%,""" %&1,"" $1",/""
(b) *o prorate prorate the over8appl over8applied ied overhead overhead we need the ending balances in #I< and Finished =oods Inventories and the >ost of =oods ?old.
6 >ost of goods sold (given) Finished goods inventory (given) #I< inventory (see below) *otal
$3,&3,"" " %/",""" 1,3&","" " $,"!,"" "
.1" .1"6 6 $ ,! ,! 1/,3 11 11.&16 " /!,1 //.&&6
nding #or in process inventory:
0irect materials 0irect labour Manufacturing overheadA
1%@ 11&> *otal $//","" $ " !/",""" $ !",""" 11","" " 3&",""" "",""" ,"" 1&,"" /","" " " " $3,"" $1,"","" " " $1,3&","""
A 0irect labour amount - "6 overhead rate
9llocatio n
$1",/""
<'@BM 383"9 (>ontinued) (c) First ad4ust cost of goods sold for prorated under8applied overhead. (1)
>ost of goods sold
$3,&3,""" ,! $!,""3,!
7I>B BIMI*0 Income ?tatement for the year /"1/ ?ales Bess: 9d4usted cost of goods sold (1) =ross profit Bess: perating eCpenses 7et income before taCes *aCes at !"6 7et income
$,/"1,3 !,""3,! /,1&%,%" 1,%,%" 3!",""" 13,""" $ /"!,"""
PROBLEM 331A 0irect materials used: @eginning inventory
$%&,/" &," (1) 1%!,3" %3,/" 1"1," ,! $&,%3/
(1)
Materials purchased: 9ccount payable, ending
$3,!" ",""" 113,!" 1%,&" $&,"
0irect labour: *otal
$3,"" 1,3% $,1/
Manufacturing overhead applied: verhead, 7ov 3" verhead, 7ov 1 verhead incurred during the month
$13,3"" 1/&,"" 33,"" /,%" $ 3,"
PROBLEM 331A( Cont i nued) >ost of goods sold: @alance 7ov 3" @alance 7ov 1 >ost of goods sold for the month
$,""" %,""" $ ","""
>ost of completed goods: Finished goods, 7ov 3" ost of completed goods:
$3,""" ",""" 1!3,""" ",""" $3,"""
nding wor in process: @eginning wor in process
$ ,% &,%3/ ,1/ 3," /&,// 3,""" $1%,//
PROBLEM 332A (a) 'aw Materials Inventory @eg @al (1) nd @al
3,"" //,!"" %,1""
1,"" (/)
Finished =oods Inventory @eg @al (ii) nd @al
/,&" /,!" !,"/
1,31 (iii)
Dariable Factory verhead (3) () () nd @al
1,"" !1" 1,3""A 88
3,/1" (i) 88
?upplies not raw materials
#or in
/,"!" 1,"" ,""" 3",!/" 3,1"
/,!" (ii)
>ost of =oods ?old
(iii)
1,31
FiCed Factory verhead (!) () (%) () nd @al
3,""" 11" //,"" 1,"" 88
/%,/1" (i) 88
(b)
1 / 3 !
Eob rder >osting >ustom furniture shop
osting
;niue differentiated products Barge number of separate operations Babour intensive
9ll output the same or very similar >ontinuous operations Gighly automated ?tandard output made for inventory
PROBLEM 333A
( a) Appl i edover headr at e( f r om Job200)=$27, 000÷$18, 000=150% Di r e ctl a bourc os t si nc ur r e d:$ 13 0, 0 00+$ 45 , 0 00+$ 25 , 0 00=$ 20 0, 0 00 MOHappl i ed=$200, 000×1. 5=$300, 000. ( b) JobNo.200 Dat e
Di r ect Mat er i al s
Di r ec t Labour
Manuf act ur i ng Over head
1/ 1 Year
$ 13 , 50 0 15 0, 0 00 $ 16 3, 5 00
$1 8, 0 00 13 0, 0 00 $ 14 8, 0 00
$2 7, 0 00 1 95 , 0 00 $ 22 2, 0 00
Costofcompl et edj ob 16 3, 5 00 Di r ectmat er i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48 , 0 00 Di r ectl a bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2, 0 00 Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 $ 53 3, 5 00 T ot alcost
JobNo.300 Dat e 1/ 1 Year
Di r ect Mat er i al s
Di r ec t Labour
Manuf act ur i ng Over head
$45, 000 $ 45 , 0 00
$ 45 , 0 00 $ 45 , 0 00
$ 67 , 5 00 $ 67 , 5 00
Costofcompl et edj ob 45 , 0 00 Di r ectmat er i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45 , 0 00 Di r ectl a bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 5 00 Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 $ 15 7, 5 00 T ot alcost
PROBLEM 333A( Cont i nued) JobNo.400 Dat e 1/ 1 Year
Di r ect Mat er i al s
Di r ec t Labour
Manuf act ur i ng Over head
$35, 000 $ 35 , 0 00
$ 25 , 0 00 $ 25 , 0 00
$ 37 , 5 00 $ 37 , 5 00
Costofcompl et edj ob Di r ectmat er i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl a bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T ot alcost ( c) Manufacturing overhead applied: verhead incurred during the month Manufacturing overhead applied ver8applied overhead ( d)
$ 35 , 0 00 25 , 0 00 37 , 5 00 $ 97 , 5 00
$/%,/" 3"",""" $ /3,%"
REDFI REI NC. St at ementofCostofGoodsSol d Fort heYearEndedDecember31,2012 Fi ni shedgoodsi nvent or y ,Ja nuar y1. . . . . . . . . . . . . . . . Costofgoodsmanuf act ur ed* . . . . . . . . . . . . . . . . . . . . . . . . . . Costofgoodsavai l abl ef ors al e. . . . . . . . . . . . . . . . . . . . . . . . Less:Fi ni shedgoods,December31* * . . . . . . . . . . . . . Unadj ust edCostofgoodssol d* * * . . . . . . . . . . . . . . . . . . . . . Less:Over appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . Adj ust edcostofgoodssol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* Job#200,$533, 500+Job#300,$157, 500 * * J ob# 30 0,$ 15 7, 5 00 * * * J ob# 10 0,$ 85 , 0 00+J ob# 20 0,$ 53 3, 5 00
$85 , 00 0 691, 000 7 76 , 0 00 157, 500 618, 500 23, 750 $594, 750
PROBLEM 333A( Cont i nued) ( e)
Sel l i ngpr i ceofJob200:$533, 500×1. 30=$693, 550
( f ) Endi ngbalance in direct materials inventory: @alance, Eanuary 1
Endi ngba l a nc ei nwor k i npr oc es si nv ent or y : Ba l a nc e,Ja nuar y1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pl us:Manuf act ur i ngcost sdur i ngt hemont h: Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $230, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200, 000 Appl i edmanuf act ur i ngover head. 300, 000 Tot alcostofwor ki npr ocess. . . . . . . . . . . . . . . . . . . . Less:costofgoodsmanuf act ur ed. . . . . . . . . . Bal ance, December31( Job4 00) . . . . . . . . . . . . . . . .
$ !,""" 3%,""" !/",""" /3",""" $1&","""
$ 58 , 5 00
730, 000 788, 500 691, 000 $ 97, 500
PROBLEM 334A Not e :Somel e t t e r sca nnotbede t e r mi ne dunt i ls ubs eque ntl e t t e r sar esol v ed. ( a) $84, 000 ( $75, 000+$9, 000) . ( b) $21, 400 ( $15, 000+$90, 400–$8 4, 000) . ( c) $32, 200 ( $19 , 000+$ 13, 200) . ( d) $9 1, 20 0 ( $1 14, 00 0÷125%) . ( e) $114, 000 ( Gi veni nManuf act ur i ngOver headaccount ) ( f ) $307, 025 ( $32, 200+$75, 000+$91, 200+$114, 000–$5, 375) . ( g) $5, 375
[ $2, 000+$1, 500+( $1, 500×1. 25) ] .
( h) $145, 000 ( Gi veni not herdat a) . ( i ) $307, 025 ( See( f )above) . ( j ) $314, 025 ( $145, 000+$307, 025–$138, 000) . ( k) $138, 000 ( Gi veni not herdat a) . ( l ) $1 07, 200 ( Sameas( m) ) . ( m)$107, 200 ( $91, 200+$16, 000) . ( n) $92, 000 ( $114, 000+$3, 000–$9, 000–$16, 000)
Problems: Set B Prepar P3-35B Lowry Manufacturing uses a job-order cost system and applies overhead to production on the basis of direct e labour hours. On January 1, 2012, Job No. 25 was the only job in process. The costs incurred prior to January 1 entries on this job were as follows: direct materials $10,000, direct labour $6,000, and manufacturing overhead in a $9,000. Job No. 23 had been completed at a cost of $45,000 and was part of finished goods inventory. There
joborder cost system and job cost sheets.
was a $5,000 balance in the Raw Materials Inventory account. During the month of January, the company began production on Jobs 26 and 27, and completed Jobs 25 and 26. Jobs 23 and 25 were sold on account during the month for $65,000 and $74,000, respectively. The following additional events occurred during the month: 1. The company purchased additional raw materials for $40,000 on account. 2. It incurred factory labour costs of $31,500. Of this amount, $7,000 related to employer payroll taxes. 3. It incurred the following manufacturing overhead costs: indirect materials $10,000, indirect labour
$7,500, depreciation expense $12,000, and various other manufacturing overhead costs on account $11,000. 4. It assigned direct materials and direct labour to jobs as follows: Job No.
Direct Materials
Direct Labour
25
$ 5,000
$ 3,000
26
15,000
12,000
27
13,000
9,900
5. The company uses direct labour hours as the activity base to assign overhead. Direct labour hours
incurred on each job were as follows: Job No. 25, 200; Job No. 26, 800; and Job No. 27, 600. Instructions
(a) Calculate the predetermined overhead rate for 2012, assuming Lowry Manufacturing estimates total manufacturing overhead costs of $500,000, direct labour costs of $300,000, and direct labour hours of 20,000 for the year. (b) Open job cost sheets for Jobs 25, 26, and 27. Enter the January 1 balances on the job cost sheet for Job No. 25. (c) Prepare the journal entries to record the purchase of raw materials, the factory labour costs incurred, and the manufacturing overhead costs incurred during the month of January. (d) Prepare the journal entries to record the assignment of direct materials, direct labour, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary. (e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month. (f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month. (g) Calculate the balance in the Work in Process Inventory account at the end of the month. What does this balance consist of? (h) Calculate the amount of under- or over-applied overhead.
Prepare P3-36B For the year ended December 31, 2012, the job cost sheets of Mazzone Company contained the entries in a following data: job-order cost
system and partial income statement.
Job Number 7650
7651
7652
Explanation
Direct Materials
Direct Labour
Manufacturing Overhead
Total Costs
Balance 1/1
$17,000
$20,000
$25,000
$ 62,000
Current year's costs
32,000
36,000
45,000
113,000
Balance 1/1
12,000
16,000
20,000
48,000
Current year's costs
30,000
40,000
50,000
120,000
Current year's costs
43,000
64,000
80,000
187,000
Other data: 1. Raw materials inventory totalled $20,000 on January 1. During the year, $100,000 of raw
materials were purchased on account. 2. Finished goods on January 1 consisted of Job No. 7648 for $93,000 and Job No. 7649 for $62,000. 3. Job No. 7650 and Job No. 7651 were completed during the year. 4. Job Nos. 7648, 7649, and 7650 were sold on account for $490,000. 5. Manufacturing overhead incurred on account totalled $125,000. 6. Other manufacturing overhead consisted of indirect materials of $12,000, indirect labour of
$18,000, and depreciation on factory machinery of $19,500. Instructions
(a) Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. ( Hint: Use a single T account for Work in Process Inventory.) Calculate each of the following, then post each to the T account: 1. beginning balance 2. direct materials 3. direct labour 4. manufacturing overhead 5. completed jobs
(b) Prepare the adjusting entry for Manufacturing Overhead, assuming the balance is allocated entirely to Cost of Goods Sold. (c) Determine the gross profit to be reported for 2012.
Calculate the P3-37B Tel Corp. has the following estimated costs for 2012: predetermine Direct materials d overhead rate and a job Direct labour cost. Rent on factory building Sales salaries Depreciation on factory equipment
$ 160,000 2,000,000 150,000 250,000 80,000
Indirect labour
120,000
Production supervisor's salary
150,000
Machine hours
40,000
Other data: Tel Corp. estimates that 20,000 direct labour hours will be worked during the year. Assume that manufacturing overhead is applied on the basis of machine hours and Job XY120 is completed during the year. Instructions
(a) Calculate the overhead rate per machine hour. (b) Calculate the rate of direct labour per hour. (c) Calculate the total cost of a job that will take 200 machine hours, $15,000 in direct material, and 50 direct labour hours using a normal cost system.
Prepare P3-38B Giovanni Lofaro is a contractor specializing in custom-built Jacuzzis. On May 1, 2012, his ledger entries in a contains the following data: job-order Raw Materials Inventory $30,000 cost system and cost of Work in Process Inventory 12,200 goods Manufacturing Overhead 2,500 (dr.) manufacture d schedule. The Manufacturing Overhead account has debit totals of $12,500 and credit totals of $10,000. Subsidiary data for Work in Process Inventory on May 1 include the following: Job by Customer
Direct Materials
Direct Labour
Manufacturing Overhead
Looper
$2,500
$2,000
$1,400
Zammit
2,000
1,200
840
900
800
560
$5,400
$4,000
$2,800
Ingle
During May, the following costs were incurred: (1) raw materials purchased on account $4,000, (2) labour paid $7,600, and (3) manufacturing overhead paid $1,400. A summary of materials requisition slips and time tickets for the month of May reveals the following: Job Cost Sheets Job by Customer
Materials Requisition Slips
Time Tickets
Looper
$ 500
$ 400
Zammit
600
1,000
Ingle
2,300
1,300
Gao
1,900
2,900
$5,300
$5,600
1,500
2,000
$6,800
$7,600
General use
Overhead was charged to jobs on the basis of $0.70 per dollar of direct labour cost. The Jacuzzis for customers Looper, Zammit, and Ingle were completed during May. Each Jacuzzi was sold for $12,000 cash. Instructions
(a) Prepare journal entries for the May transactions: 1. the purchase of raw materials, factory labour costs incurred, and manufacturing overhead
costs incurred
2. assignment of direct materials, labour, and overhead to production 3. completion of jobs and sale of goods
(b) Post the entries to Work in Process Inventory. (c) Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs. (d) Prepare a cost of goods manufactured schedule for May.
Prepare P3-39B SNC produces fire trucks. The company uses a normal job-order costing system to compute its cost of entries and goods manufactured. The company's policy is to price its job at cost plus 40% markup. On January 1, close out 2012 there was only one job in process with the following costs: under- or Job A-1 over-applied overhead. Direct materials $ 3,500 Direct labour
$15,000
Applied overhead
$18,000
Total
$36,500
The following balances were taken from the general ledger of the company as of January 1, 2012: Direct materials inventory
$35,000
Finished goods inventory (for Job D-1)
$65,000
During the year 2012, the following events occurred: Direct materials were purchased on account for $275,000 Two more jobs were started: Job B-1 and Job C-1. Direct materials and direct labour costs incurred by each job in process during the year 2012 are as follows: Job A-1
Job B-1
Job C-1
Direct materials
$150,000
$30,000
$10,000
Direct labour
$150,000
$35,000
$15,000
The company incurred the following actual factory overhead during the year: Factory rent
$120,000
Factory supplies
$ 45,500
Indirect labour
$ 75,750
Jobs A-1 and B-1 were completed and Jobs D-1 and A-1 were sold. Instructions
(a) Calculate the total applied overhead for the year 2012 if the factory overhead costs are applied to each job on the basis of direct labour dollars. (b) Prepare simple job-order cost sheets for jobs A-1, B-1 and C-1 for the year ended December 31, 2012. (c) Determine whether overhead is over-applied or under-applied. By how much?
(d) Prepare a schedule of Cost of Goods Sold, identifying both normal and adjusted cost of goods sold, for the year ended December 31, 2012. (e) Compute the selling price of Job A-1. (f) Compute the ending balances as of December 31, 2012, for the following accounts: direct materials and work-in-process.
Prepare entries P3-40B Laramie Ltd. uses a normal job-order cost system. At the beginning of the month of June, two orders and close out were in process as follows: under- or Order 8A Order 10A overapplied overheads. Raw materials $2,000 $1,900 Direct labour
1,200
200
Manufacturing overhead absorbed
1,800
300
There was no inventory of finished goods on June 1. During the month of June, orders 11A and 12A were put into process. Raw materials requirements amounted to $13,000, direct labour expenses for the month were $20,000, and actual manufacturing overhead recorded during the month amounted to $28,000. The only order in process at the end of June was order 12A, and the costs incurred for this order were $1,150 of raw materials and $1,000 of direct labour. In addition, order 11A, which was 100% complete, was still on hand as of June 30. Total costs allocated to this order were $3,300. The firm's overhead allocation rate in June was the same as the rate used in May and is based on labour cost. Instructions
Prepare journal entries, with supporting calculations, to record the cost of goods manufactured, the cost of goods sold, and the closing of the over- or under-applied manufacturing overhead to Cost of Goods Sold. (adapted from CMA Canada) Calculate P3-41B Handy Widget Co. does a wide variety of metalwork on a custom basis. During the month of June 2012, various job it worked on six jobs. A summary of the job cost sheets on these jobs is given below: costs in a Job No. Direct Materials Direct Labour Factory Overhead Applied Total Cost of Job comprehensive manufacturing 43 $ 410 $ 360 $ 288 $ 1,058 system. 44 950 990 792 2,732 45
110
85
68
263
46
1,500
1,140
912
3,552
47
950
850
680
2,480
48*
270
115
92
477
$4,190
$3,540
$2,832
$10,562
Handy Widget has used the same overhead rate on all jobs. Job No. 43 was the only job in process at the beginning of the month. At that time, it had incurred direct labour costs of $150 and total costs of $570.
Instructions
Answer the following questions: (a) What is the predetermined overhead rate that the Handy Widget Co. uses? (b) Assume that during June the factory overhead was over-applied by $600. What was the actual factory overhead cost incurred during the month? (c) What was the total amount of direct materials placed into production during June? (d) How much direct labour cost was incurred during June? (e) What was the cost of goods manufactured for June? (f) The beginning finished goods inventory was $2,550. What was the cost of goods sold for the month if the ending finished goods inventory was $3,550? (adapted from CGA-Canada) Analyze P3-42B Spivey Company's fiscal year ends on June 30. The following accounts are found in its job-order cost manufacturing accounting system for the first month of the new fiscal year: accounts and Raw Materials Inventory determine missing July 1 Beginning balance 19,000 July 31 Requisitions (a) amounts. 31 Purchases 90,400 July 31
Ending balance
(b) Work in Process Inventory
July 1
Beginning balance
(c)
31
Direct materials
31
Direct labour
(d)
31
Overhead
(e)
Ending balance
(g)
July 31
July 31
Jobs completed
(f)
70,000
Finished Goods Inventory July 1
Beginning balance
(h)
31
Completed jobs
(i)
July 31
Ending balance
(k)
July 31
Cost of goods sold
(j)
Wages assigned
(m)
Factory Labour July 31
Factory wages
(l)
July 31
Manufacturing Overhead July 31
Indirect materials
8,900
31
Indirect labour
16,000
31
Other overhead
(n)
July 31
Overhead applied
$104,000
Other data: 1. On July 1, two jobs were in process: Job No. 4085 and Job No. 4086, with costs of $19,000 and
$8,200, respectively. 2. During July, Job Nos. 4087, 4088, and 4089 were started. On July 31, only Job No. 4089 was unfinished. This job had charges for direct materials of $2,000 and direct labour of $1,500, plus manufacturing overhead. Manufacturing overhead was applied at the rate of 130% of direct labour cost.
3. On July 1, Job No. 4084, costing $135,000, was in the finished goods warehouse. On July 31,
Job No. 4088, costing $143,000, was in finished goods. 4. Overhead was $3,000 under-applied in July.
Instructions
List the letters (a) through (n) and indicate the amount pertaining to each letter. Show calculations.
Calculate job P3-43B Price-Gordon Architectural Consultants Ltd. uses a modified job-order costing system to keep track of costs and project costs. During October 2012, the firm worked on four projects. The following table provides a inventories, summary of the cost of materials used and the number of consulting hours worked on each of the four and prepare projects in October: an income Project Number Cost of Materials Consulting Hours Worked statement for a service 80 $120 138 organization. 84 85 145 85
100
160
86
150
187
The records for September showed that 40 hours had been worked and $80 worth of materials had been used on Project 80. Projects 80 and 86 were completed in October, and bills were sent to the clients. Consultants at Price-Gordon billed clients at $120 per consulting hour. The actual labour cost to the firm (based on salary cost) was $60 per hour. Overhead is charged to projects based on the consultants' time spent on the project. Total overhead for the current fiscal year, based on expected activity of 10,000 consulting hours, was estimated to be $267,000. This total overhead cost included a fixed portion of $84,000, which covered rent, depreciation, and so on. Actual overhead for October was $21,455. PriceGordon closes under- and over-applied overhead to Cost of Services at month end. Instructions
(a) Determine the product costs for Project 80. (b) Determine the balance in Work in Process as at October 31. (c) Prepare the income statement for October 2012, including the appropriate amount of under- or overapplied overhead. Other expenses for October were $2,340.94.
SOLUTI ONSTO PROBLEMS:SETB PROBLEM 335B
( a) $500, 000÷20, 000di r ectl abourhour s=$25perdi r ectl abourhour ( b) Se es ol ut i ont opa r t( e )f orj obc os ts he et s ( c) Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 000 Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40, 000
Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 500 Fact or yWagesPay abl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Empl oyerPayr ol lTaxesPayabl e. . . . . . . . . . . . . . . . . . . . . . . .
24, 500 7, 000
Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 500 Accumul at e dDepr eci at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12, 000 10, 000 11, 000 7, 500
( d) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 000 Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $ 5, 0 00+$ 15 , 0 00+$ 13 , 0 00 ) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 900 Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33, 000
24, 900
( $ 3, 0 00+$ 12 , 0 00+$ 9, 9 00 ) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 000 Manuf act ur i ngOv er head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 200+800+600)×$25perhour
40, 000
Seesol ut i ont opar t( e)f orpost i ngst oj obc os tsheet s.
PROBLEM 335B( Cont i nued) ( b) &( e) JobCostSheet s JobNo.25 Dat e
Di r ectMat er i al s
Di r ect Labour
Manuf act ur i ngOver head
Beg. Jan.
$ 10 , 0 00 5, 000 $ 15 , 0 00
$ 6, 0 00 3, 000 $ 9, 0 00
* $ 9, 000* * 5, 0 00* * $ 14, 0 00*
Costofcompl et edj ob Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 000 Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 000 Tot alcost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38, 000 * $ 25×2 00di r e ctl a bourhour s JobNo.26 Dat e
Di r ectMat er i al s
Di r ect Labour
Manuf act ur i ngOver head
Jan.
$15, 000 $ 15 , 0 00
$ 12 , 0 00 $ 12 , 0 00
* * $ 20 , 0 00* * * * $ 20 , 0 00* *
Costofcompl et edj ob Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 000 Manuf a ct ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 000 Tot alcost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $47, 000
* * $ 25×8 00di r e ctl a bourhour s JobNo.27 Dat e
Di r ectMat er i al s
Di r ect Labour
Jan. $13, 000 $9, 900 * * * $2 5×6 00di r ec tl a bourhour s
Manuf act ur i ngOver head * * * $15, 000* * *
Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $3 8, 0 00+$ 47, 0 00 )
85, 000
( f ) CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $4 5, 0 00+$ 38, 0 00 )
83, 000
85, 000
Account sRecei vabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139, 000 Sal es. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $6 5, 0 00+$ 74, 0 00 ) ( g) Begi nni ngbal ance Di r ectmat er i al s Di r e ctl a bour Manuf act ur i ngover head Endi ngbal ance
Wor ki nPr ocess 2 5, 0 00 85 , 00 0 3 3, 0 00 2 4, 9 00 4 0, 0 00 37, 900
83, 000
139, 000
Costofcompl et edj obs25and26
Thebal ancei nt hi saccountconsi st soft hecur r entcost sassi gnedt oJob 27: Di r ectMat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf a ct ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tot a lcost sassi gned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$13, 000 9, 900 15, 000 $37, 900
( h) Manuf act ur i ngOver head Act ual Appl i e d 40 , 5 00 40 , 0 00 500 Thebal ancei nt heManuf act ur i ngOver headaccounti sunder appl i ed.
PROBLEM 336B
( a)
Wor ki nPr ocessI nvent or y 1/ 1 Bal ance( 1) 110, 000 Compl et edwor k( 5)( i i i ) Di r ectmat er i al s( 2) 105, 000 Di r ectl abour( 3) 140, 000 Manuf act ur i ngover head( 4) 175, 000 12/ 31 Bal ance( 6) 187, 000
343, 000
( 1) Job7650 Job765 1
$62, 000 4 8, 000 $ 11 0, 0 00
( 3)
Job7650 Job765 1 Job765 2
$36, 00 0 40, 00 0 64, 000 $ 14 0, 0 00
( 2) Job7650 Job765 1 Job765 2
$32, 000 30 , 0 00 4 3, 000 $ 10 5, 0 00
( 4)
Job7650 Job765 1 Job765 2
$45, 00 0 50, 00 0 80, 000 $ 17 5, 0 00
( 5) ( i ) Job7650 Begi nni ngbal ance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( i i ) Job7651 Begi nni ngbal ance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( i i i )T ot a lcostofc ompl e t e dwor k Job7650. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7651. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$62, 000 32, 000 36, 000 45, 000 $ 17 5, 0 00 $48, 000 30, 000 40, 000 50, 000 $ 16 8, 0 00 $175, 000 168, 000 $ 34 3, 0 00
PROBLEM 336B( Cont i nued) Wor ki npr ocessbal ance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unfini shedJob7652. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( i v )Cur r e nty ear ’ scos t Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngov er hea d. . . . . . . . . . . . .
$187, 000 $187, 000( i v)
$43, 000 64, 000 80, 000 $ 18 7, 0 00
( b) Act ualover headcost s I ncur r edonaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I ndi r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I ndi r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depr eci at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appl i edover headcost s Job7650. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7651. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7652. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Act ualover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Over appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf a ct ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( c) Sal es( gi ven) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costofgoodssol d Job7648. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7649. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Job7650. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less:Over appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . . Gr osspr ofit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$125, 000 12, 000 18, 000 19, 500 $ 17 4, 5 00 $45, 000 50, 000 80, 000 $ 17 5, 0 00 $174, 500 175, 000 $ 500
500 $490, 000
$93, 000 62, 000 175, 000 3 30 , 0 00 500 329, 500 $160, 500
PROBLEM 337B ( a ) Fi r s tde t e r mi net het ot a le st i ma t e dma nuf a ct ur i ngov er he adc os t sf ort he y e a r . Rentonf act or ybui l di ng
$150, 00 0 Depr eci at i ononf act or yequi pment 80, 000 I ndi r ectl abour 120, 000 Pr oduct i onsuper vi sor ’ ssal ar y 150, 00 0 Tot alest i mat edMOHcost s $500, 00 0 Pr edet er mi nedover head = Est i mat edannualover headcost s r at e Ex pe ct e dannua loper a t i nga ct i v i t y = $500 , 000÷40, 000machi nehour s = $12. 50permachi nehour ( b) Di r e ctl a bourr a t e=$ 2, 0 00 , 0 00÷2 0, 0 00l a bourhour s =$100perdi r ectl abourhour ( c )T ot a lc os toft hej obwoul dbe : Di r ectmat er i al s Di r ectl abour( 50hr s×$100) Manuf act ur i ngover head( 200hr s×$12. 50) Tot alcostoft hej ob
$15, 000 5, 000 2, 500 $22, 500
PROBLEM 338B ( a) ( 1) Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Account sPayabl e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4, 000 4, 000
Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7, 600
Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1, 400
( 2) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw Mat er i al sI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5, 300 1, 500
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngOver head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fact or yLabour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5, 600 2, 000
Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( $5, 600×. 70) Ma nuf a ct ur i ngOv er he ad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3, 920
( 3) Fi ni shedGoodsI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wor ki nPr oc essI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20, 190
Di r e ct
Di r e ct Manuf act ur i ng
T o t a l
Mat er i al s
Labour
Over head*
Cost s
Looper
$ 3, 00 0
$2 , 40 0
$ 1, 68 0
$7, 080
Zammi t
2, 600
2, 200
1, 540
6, 340
I ngl e
3, 200
2, 100
1, 470
6, 770
Job
$ 20 , 1 90
7, 600
1, 400
6, 800
7, 600
3, 92 0
2 0, 1 90
* 7 0% ofdi r e ctl a bourc os t PROBLEM 338B( Cont i nued) Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sal es( 3×$12, 000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36, 0 00
CostofGoodsSol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fi ni s he dGoodsI nv ent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20, 190
( b)
36, 000
Wor ki nPr ocessI nvent or y 5/ 1 Bal ance 12, 200 5/ 31 Compl et edwor k Di r ectmat er i al s 5, 300 Di r ectl abour 5, 600 Over headappl i ed 3, 920 5/ 31 Bal ance 6, 830
2 0, 1 90
20, 190
( c ) Wor ki nPr ocessI nvent or y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6, 830 J ob:Gao( Di r ec tma t e r i a l s$1 , 9 00+Di r ec tl abour$2 , 9 00+ Manuf act ur i ngover head$2, 030) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6, 830 ( d)
GI OVANNILOFARO COMPANY CostofGoodsManuf act ur edSchedul e Fort heMont hEndedMay31, 2012 Wor ki npr ocess,May1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectmat e r i al sused. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5, 300 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 600 Manuf act ur i ngover headappl i ed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 920 T ot almanuf ac t ur i ngcost s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T ot alcostofwor ki npr ocess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Le ss :Wor ki npr oc es s,Ma y3 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cos tofgoodsmanuf a ct ur e d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$12, 200
14, 820 27, 020 6 , 8 30 $2 0, 1 90
PROBLEM 339B
( a) Appl i edover headr at e( f r om JobA1)=$18, 000÷$15, 000=120% Di r e ctl a bourc os t si nc ur r e d:$ 15 0, 0 00+$ 35 , 0 00+$ 15 , 0 00=$ 20 0, 0 00 MOHappl i ed=$200, 000×1. 2=$240, 000. ( b) JobA1 Dat e
Di r ect Mat er i al s
Di r ec t Labour
Manuf act ur i ng Over head
1/ 1 Year
$ 3, 500 15 0, 0 00 $ 15 3, 5 00
$1 5, 0 00 15 0, 0 00 $ 16 5, 0 00
$1 8, 0 00 1 80 , 0 00 $ 19 8, 0 00
Costofcompl et edj ob 15 3, 5 00 Di r ectmat er i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65 , 0 00 Di r ectl a bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8, 0 00 Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 $ 51 6, 5 00 T ot alcost
JobB1 Dat e 1/ 1 Year
Di r ect Mat er i al s
Di r ec t Labour
Manuf act ur i ng Over head
$30, 000 $ 30 , 0 00
$ 35 , 0 00 $ 35 , 0 00
$ 42 , 0 00 $ 42 , 0 00
Costofcompl et edj ob 30 , 0 00 Di r ectmat er i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35 , 0 00 Di r ectl a bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 0 00 Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 $ 10 7, 0 00 T ot alcost
PROBLEM 339A( Cont i nued) JobC1 Dat e 1/ 1 Year
Di r ect Mat er i al s
Di r ec t Labour
Manuf act ur i ng Over head
$10, 000 $ 10 , 0 00
$ 15 , 0 00 $ 15 , 0 00
$ 18 , 0 00 $ 18 , 0 00
Costofcompl et edj ob Di r ectmat er i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Di r ectl a bour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manuf act ur i ngover head. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T ot alcost ( c) Manufacturing overhead applied: verhead incurred during the month Manufacturing overhead applied ;nder8applied overhead ( d)
$ 10 , 0 00 15 , 0 00 18 , 0 00 $ 43 , 0 00
$/!1,/" /!",""" $ 1,/"
SNC St at ementofCostofGoodsSol d Fort heYearEndedDecember31,2012 Fi ni shedgoodsi nvent or y ,Ja nuar y1. . . . . . . . . . . . . . . . Costofgoodsmanuf act ur ed* . . . . . . . . . . . . . . . . . . . . . . . . . . Costofgoodsavai l abl ef ors al e. . . . . . . . . . . . . . . . . . . . . . . . Less:Fi ni shedgoods,December31* * . . . . . . . . . . . . . Unadj ust edCostofgoodssol d* * * . . . . . . . . . . . . . . . . . . . . . Pl us:Under appl i edover head. . . . . . . . . . . . . . . . . . . . . . . . . . Adj ust edcostofgoodssol d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* JobA1,$516, 500+JobB1,$107, 000 * * JobB1,$ 10 7, 00 0 * * * J obD1 ,$ 65 , 0 00+J obA1 ,$ 51 6, 5 00
$65 , 00 0 623, 500 6 88 , 5 00 107, 000 581, 500 1, 250 $582, 750
PROBLEM 339A( Cont i nued) ( e)
Sel l i ngpr i ceofJobA1:$516, 500×1. 40=$723, 100
( f ) Endi ngbalance in direct materials inventory: @alance, Eanuary 1
Endi ngba l a nc ei nwor k i npr oc es si nv ent or y : Ba l a nc e,Ja nuar y1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pl us:Manuf act ur i ngcost sdur i ngt hemont h: Di r ectmat er i al s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $190, 000 Di r ectl abour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200, 000 Appl i edmanuf act ur i ngover head. 240, 000 Tot alcostofwor ki npr ocess. . . . . . . . . . . . . . . . . . . . Less:costofgoodsmanuf act ur ed. . . . . . . . . . Bal ance,December31* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,""" /%,""" 31",""" 1&",""" $1/","""
$ 36 , 5 00
630, 000 666, 500 623, 500 $ 43, 000
* ( JobC1,$4 3, 0 00 )
PROBLEM 340B #or in process.......................................................... 'aw materials inventory.....................................
13,"""
#or in process.......................................................... Factory Babour....................................................
/","""
#or in process.......................................................... Manufacturing verhead.................................... (verhead rate 5 $1,"" + $1,/"" 5 1"6 of labour costH $/",""" - 1"6 5 $3",""")
3","""
Manufacturing verhead........................................... Darious accounts................................................
/,"""
Finished goods........................................................... #or in process..................................................
,%"
>alculation of finished goods: @eginning inventory, #or in process ost of goods manufactured
13,""" /",""" 3","""
/,""" ,%" $ %,!"" A 13,""" /",""" 3",""" %",!"" 3," (1) $ ,%"
A rder 9 ($/,""" 2 $1,/"" 2 $1,"") 2 rder 1"9 ($1,&"" 2 $/"" 2 $3"") 5 $%,!"" (1) rder 1/9 'aw materials 0irect labour verhead ($1,""" - 1"6)
>ost of goods sold..................................................... Finished goods...................................................
$ 1,1" 1,""" 1,"" $ 3,"
3,!" 3,!"
<'@BM 38!1 (>ontinued) (e)
(f)
#or in process inventory, Eune 1 ost of goods manufactured for Eune Finished goods inventory, Eune 1 ost of goods manufactured >ost of goods available for sale Bess: Finished goods inventory, Eune 3" >ost of goods sold
$ $3,&" 3,3&" /,%1/
$ /," 1"," 1/,3 3," $ &,"
%"
&,&&/ 1",/ !%% $1","
PROBLEM 342B
( a) $7 8, 90 0
( $7 0, 000+$8, 90 0) .
( b) $30, 500
[ ( $19, 000+$90, 400)–$78, 900( See( a) ) ] .
( c) $27, 200
( Gi veni not herdat a—$19, 000+$8, 200) .
( d) $80, 000
( $104 , 000manuf act ur i ngover headappl i ed÷130%) .
( e) $104, 000 ( Manuf act ur i ngover headappl i ed) . ( f ) $275, 750 [ $27, 200+$70, 000+$80, 000+$104, 000–$5, 450( See( g) ) ] . ( g) $5 , 45 0
[ $2, 000+$1 , 50 0+( $1, 500×13 0%) ] .
( h) $135 , 000 ( Gi veni not herdat a) . ( i ) $2 75, 750 ( Sameas( f ) ) . ( j ) $267, 750 [ $135, 000+$275, 750–$143, 000( Gi veni not herdat a) ] . ( k) $143 , 000 ( Gi veni not herdat a) . ( l ) $96, 000
[ $80, 000( See( d) )+$16, 000] .
( m)$96, 000
( Samea s( l ) ) .
( n) $82, 100
[ $104, 000+$3, 000( Gi veni not herdat a)–$8, 900–$16, 000] .
PROBLEM 343B (a)
verhead rate 5 $/%,""" + 1",""" hours 5 $/.%"
(b)
/""."" 1","."" !,%/." $1,3/."
#or in
Materials 0irect labour (at $" per hour) verhead (at $/.%" per 0B hour)
(c)
$
*otal $ 1.""
,%"".""
&,"".""
1,3"".""
3,%1." $1/,."
!,/%/."" $13,&%/.""
,1!3." $/,/."
<'I>8='07 9'>GI*>*;'9B >7?;B*97*? B*0. Income ?tatement for the month of ctober, /"1/ >onsulting revenue Bess: >ost of services =ross
$!3,""."" 3,/&." %,1%"." /,3!".&! $ !,/&.
(1) (/)