121
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) Assigned 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.
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182)
Lock Production 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 $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.
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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, what is the cost of the direct materials used to produce these units?
185)
The 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 labor costs. What is
the gross profit per unit on its sale?
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
131,40
0
391,500
Dec.
Job No. 7 completed
G-12
73,800
317,700
Dec. 31
Job No. 8 completed
G-15
168,30
0
149,400
Fill in the blanks for the following:
(1) The total cost of the direct materials, direct labor, and factory overhead applied in the December
31 Work in Process inventory 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?
Factory overhead and direct labor ……..……………………….
15,000
Overhead rate = $36,000/$144,000 = .25%
188)
MOB Corp. maintains an internet-based general ledger. Overhead is applied on the basis of direct
labor costs. Its bookkeeper accidentally deleted most of the 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
C
27
ost of Goods Sold
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.
(a) Prepare a journal entry to remove this difference assuming that it is not material.
(b) Instead, assume actual overhead incurred was $24,000. Describe (without computations) the
alternative procedure that Chen might perform assuming this difference is material.
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 #
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 balance in the Work in Process Inventory, Finished Goods Inventory, and Factory
Overhead accounts. Does the Factory Overhead account balance indicate an over– or underapplied
overhead?
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131
191) The following information is available for the
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-year ….
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-year…….
4,200
Raw materials purchased …………………….
116,200
Raw materials used in production
121,800
(includes $7,000 of indirect materials) ……..
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) Assignment of 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 applied at 130% of direct labor cost. How much
overhead would be allocated to Job No. 105 if it 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 Job No. 325 if the total direct materials costs was $40,000?
194)
Selected information from the budget of the Singh Corp. at the beginning of the year follows:
Estimated factory overhead $132,000
Estimated direct labor hours 55,000 hours
Estimated machine hours……… 41,250 hours
Estimated direct labor cost $825,000
Actual factory overhead
incurred during the year
$144,000
Calculate the predetermined overhead rate if the company uses the following as a basis:
(a) Direct labor hours.
(b) Direct labor cost.
(c) Machine hours.
195)
A manufacturing company uses an overhead rate based on direct labor cost. The company’s Work
in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost
sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of
$3,000. What is the company’s overhead application rate?