175) The following data relates to the Mass Company’s first operating period. Calculate the total
cost of goods sold for each product.
Cost/unit
Units
Product
Direct
Materials
Direct
Labor
Produced
Ending
Inventory
Overhead rate (Percent of
Direct Labor cost)
A
$10
$12
215
115
60%
B
8
15
330
180
40%
C
14
10
250
200
80%
B
C
Direct materials
$ 8.00
Direct labor
12.00
15.00
10.00
Overhead*
7.20
8.00
Total cost
Units sold**
x 100
x 150
Cost of goods sold
176) Southwick Company uses a job order costing system. On November 1, $15,000 of direct
materials and $3,500 of indirect materials were requisitioned for production. Prepare the general
journal entries to record this requisition.
177) A company that uses a job order costing system incurred $10,000 of factory payroll during
May. Prepare the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.
178) Time tickets for factory employees during the month of August are summarized as follows:
Job 919…………………………………………
$ 9,800
Job 920…………………………………………
14,650
Job 921…………………………………………
12,250
Job 922…………………………………………
16,000
Total direct labor……………………………….
$52,700
Indirect labor……………………………………
16,800
Total labor cost…………………………………
$ 69,500
Prepare the necessary journal entries to record factory payroll for direct and indirect labor.
Work in Process ………………………
Factory Overhead ……………………..
179) Chumley Advertising Agency contracted with a company to prepare an ad campaign.
Chumley uses a job order costing system. Chumley estimates that the job will take 140 designer
hours at $90 per hour and 85 staff hours at $45 per hour. Chumley uses two overhead rates in
applying overhead to jobs: Designer-related at $100 per designer hour and staff-related at $50
per staff hour. Determine the total estimated cost for this job.
180) KL Company uses a job order costing system. During the month of July, the following
events occurred:
(a) Purchased raw materials on credit, $32,000.
(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.
(c) Recorded the factory payroll totaling $37,700, which includes $8,200 indirect labor, to jobs
and overhead.
Make the necessary journal entries to record the above transactions and events.
181) EXP, Inc. had the following activities during its most recent period of operations:
(a) Purchased raw materials on account for $140,000 (both direct and indirect materials are
recorded in the Raw Materials Inventory account).
(b) Issued raw materials to production of $130,000 (80% direct and 20% indirect).
(c) Incurred factory labor costs of $250,000; allocated the factory labor costs to production (70%
direct and 30% indirect).
(d) Incurred factory utilities costs of $20,000; this amount is still payable.
(e) Applied overhead at 80% of direct labor costs.
(f) Recorded factory depreciation, $22,000.
Prepare journal entries to record the above transactions.
182) Lock Co. applies factory overhead to production on the basis of direct labor costs. Assume
that at the beginning of the current year the company estimated that direct material costs would
be $178,800, direct labor costs would be $154,000, and factory overhead costs would be
$231,000.
(1) If the $28,000 cost of Lock’s Work in Process Inventory included $5,200 of direct labor cost,
what amount of direct materials cost was included?
(2) If instead $8,100 of the company’s $34,300 Finished Goods Inventory was direct materials
cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.
88
183) Prepare journal entries to record the following transactions and events for April using a job
order costing system.
(a) Purchased raw materials on credit, $69,000.
(b) Raw materials requisitioned: $26,000 direct and $5,400 indirect.
(c) Factory payroll totaled $46,000, including $9,500 indirect labor.
(d) Paid other actual overhead costs totaling $14,500 cash.
(e) Applied overhead totaling $28,200.
(f) Finished and transferred jobs totaling $77,500.
(g) Jobs costing $58,800 were sold on credit for $103,000.
184) A company’s ending inventory of finished goods has a cost of $45,000 and consists of 750
units. If the overhead applicable to these goods is $8,400, and overhead is applied at the rate of
60% of direct labor cost, what is the cost of the direct materials used to produce these units?
185) Production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct
labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of direct labor costs.
What is the gross profit on the sale of one unit of Product BJM?
186) A company uses a job order costing system and applies overhead on the basis of direct
labor cost. A summary of the company’s Work in Process Inventory account for December
appears below.
Work In Process
Date
Explanation
PR
Debit
Credit
Balance
Dec. 1
73,800
Dec.
Direct Materials
G-20
235,800
309,600
Dec.
Direct Labor
G-20
117,000
426,600
Dec.
Factory Overhead
G-20
187,200
613,800
Dec.
Job No. 5 completed
G-8
90,900
522,900
Dec.
Job No. 6 completed
G-10
131,400
391,500
Dec.
Job No. 7 completed
G-12
73,800
317,700
Dec. 31
Job No. 8 completed
G-15
168,300
149,400
Fill in the blanks for the following:
(1) The total cost of the direct materials, direct labor, and factory overhead for jobs still in
progress is $________.
(2) The company’s overhead application rate is ________%
(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had $________ of
direct materials cost.
(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had $________
of factory overhead cost.
187) Heintz Company’s job order costing system applies overhead based on direct labor costs.
The company’s manufacturing costs for the current year were: direct materials, $108,000; direct
labor, $144,000; and factory overhead, $36,000. At year-end, the total cost of Work in Process is
$38,000, which includes $12,000 of direct labor cost. What amount of direct material cost is
included in the ending Work in Process inventory?
93
188) MOB Corp. applies overhead on the basis of direct labor costs. Its bookkeeper accidentally
deleted most of the journal entries that had been recorded for January. A printout of the general
ledger (in T-account form) showed the following:
Raw Materials Inventory
Work in Process Inventory
DR
CR
DR
CR
Ba1.1/1 10,000
Bal 1/1 4,000
f)
a)
b)
c)
d)
e)
Bal 17,500
(Bal 1/31) g)
Accounts Payable
Finished Goods Inventory
DR
CR
DR
CRR
h)
Bal. 1/1 5,000
j)
l)
i)
k)
Bal. 1/31 9,000
Bal. 1/31 15,000
Factory Overhead
Cost of Goods Sold
DR
CR
DR
CR
m)
n)
o)
A review of the prior year’s financial statements, the current year’s budget, and January’s source
documents produced the following information:
(1) Accounts Payable is used for raw material purchases only. January purchases were $49,000.
(2) Factory overhead costs for January were $17,000 none of which is indirect materials.
(3) The January 1 balance for finished goods inventory was $10,000.
(4) There was a single job in process at January 31 with a cost of $2,000 for direct materials and
$1,500 for direct labor.
(5) Total cost of goods manufactured for January was $90,000.
(6) All direct laborers earn the same rate ($13/hour). During January, 2,500 direct labor hours
were worked.
(7) The predetermined overhead rate is based on direct labor costs. Budgeted (expected)
overhead for the year is $195,000 and budgeted (expected) direct labor is $390,000.
Fill in the missing amounts a) through o) above in the T-accounts above.
189) Chen Service applied overhead on the basis of direct labor costs during the current year.
Overhead applied was $16,500. Actual overhead incurred was $17,200.
Prepare the adjusting journal entry for over- or underapplied overhead .
95
190) Calwell Corp. uses a job order costing system. Four jobs were started during the current
year. The following is a record of the costs incurred:
Job #
Direct
Material
Used
Direct
Labor
Used
Direct
Labor
Hours Used
1010
$45,000
$72,000
8,000
1011
59,000
77,000
7,000
1012
35,000
30,000
3,000
1013
26,000
40,000
5,000
Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor
hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013
were sold for $387,000. Assuming that this is Calwell’s first year of operations:
(a) Make the necessary journal entries to charge the costs to the jobs started and to record the
completion and sale of finished jobs.
(b) Calculate the ending balances in the Work in Process Inventory, Finished Goods Inventory,
and Factory Overhead accounts. Does the Factory Overhead account balance indicate over- or
underapplied overhead?
(b)
98
191) The following information is available for Annum Corporation for the current year:
Cost of goods sold …………………………..
$292,000
Depreciation of factory equipment ………….
25,200
Direct labor …………………..………………
64,750
Finished goods inventory, beginning ….
45,000
Factory insurance ……………………………
11,200
Factory utilities ………………………………
16,800
Goods transferred from Work in Process
Inventory to Finished Goods Inventory ……
285,150
Indirect labor …………………………………
8,400
Raw materials inventory, beginning…….
4,200
Raw materials purchased …………………….
116,200
Raw materials used in production
(includes $7,000 of indirect materials) ……..
121,800
Rent on factory building ………………………
22,400
Annum Company uses a predetermined overhead rate of 150% of direct labor cost. Prepare
journal entries for the following transactions and events.
(a) Purchase of raw materials on account.
(b) Assignment of materials costs to Work in Process Inventory and Factory Overhead.
(c) Assignment of factory payroll to Work in Process Inventory and Factory Overhead.
(d) Recording of other factory overhead. Assume that all items other than depreciation are paid
in cash.
(e) Apply factory overhead to Work in Process Inventory.
(f) Transfer of goods completed to Finished Goods Inventory.
(g) Recording cost of goods sold.
(h) Assignment of over- or underapplied overhead to Cost of Goods Sold.
192) A company’s predetermined overhead rate is 130% of direct labor cost. How much
overhead would be allocated to a job that required total direct labor costs of $60,000?
193) A company’s predetermined overhead rate is applied at 150% of direct materials cost. How
much overhead would be allocated to a job that used total direct materials costs was $40,000?