2-158
137. The Commonwealth Company uses a job-order costing system and applies
manufacturing overhead cost to jobs using a predetermined overhead rate based on the cost of
materials used in production. At the beginning of the year, the following estimates were made as
a basis for computing the predetermined overhead rate: manufacturing overhead cost, $186,000;
direct materials cost, $155,000. The following transactions took place during the year (all
purchases and services were acquired on account):
a. Raw materials purchased, $96,000.
b. Raw materials requisitioned for use in production (all direct materials), $88,000.
c. Utility bills incurred in the factory, $17,000.
d. Costs for salaries and wages incurred as follows:
Direct labor $174,000
Indirect labor $70,000
Selling and administrative salaries $124,000
e. Maintenance costs incurred in the factory, $12,000.
f. Advertising costs incurred, $98,000.
g. Depreciation recorded for the year, $75,000 (75 percent relates to factory assets and the
remainder relates to selling, general, and administrative assets).
h. Rental cost incurred on buildings, $80,000 (80 percent of the space is occupied by the factory,
and 20 percent is occupied by sales and administration).
i. Miscellaneous selling, general, and administrative costs incurred, $12,000.
j. Manufacturing overhead cost was applied to jobs.
k. Cost of goods manufactured for the year, $480,000.
l. Sales for the year (all on account) totaled $900,000. These goods cost $550,000 to
manufacture.
Required:
Prepare journal entries to record the information above. Key your entries by the letters a through
l.
2-161
138. Maggie Manufacturing Company applies manufacturing overhead to jobs using a
predetermined overhead rate of 75% of direct labor cost. Any underapplied or overapplied
overhead is closed to Cost of Goods Sold at the end of the month. During August, the following
transactions were recorded by the company:
Raw materials (all direct materials):
Purchased during the month $30,000
Used in production $34,000
Labor:
Direct labor-hours worked during the month 4,000
Direct labor costs incurred $32,000
Indirect labor costs incurred $8,000
Manufacturing overhead costs incurred (total) $22,000
Inventories:
Raw materials (all direct) August 31 $10,000
Work in process, August 1 $8,400
Work in process, August 31 $16,000
Required:
Determine the following:
a. The August 1 balance of Raw Materials.
b. The amount of manufacturing overhead applied to jobs in August.
c. The Cost of Goods Manufactured for August.
d. The overapplied or underapplied manufacturing overhead for the month. Label this amount
appropriately.
139. During December, Mccroskey Corporation incurred $66,000 of actual Manufacturing
Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process
was $69,000.
Required:
Prepare journal entries to record the incurrence of manufacturing overhead and the application
of manufacturing overhead to Work in Process.
140. During December, Deller Corporation purchased $79,000 of raw materials on credit to
add to its raw materials inventory. A total of $68,000 of raw materials was requisitioned from the
storeroom for use in production. These requisitioned raw materials included $4,000 of indirect
materials.
Required:
Prepare journal entries to record the purchase of materials and their use in production.
2-165
141. Alden Company recorded the following transactions for the just completed month. The
company had no beginning inventories.
(a) $72,000 in raw materials were purchased for cash.
(b) $67,000 in raw materials were requisitioned for use in production. Of this amount, $56,000
was for direct materials and the remainder was for indirect materials.
(c) Total labor wages of $112,000 were incurred and paid in cash. Of this amount, $94,000 was
for direct labor and $18,000 was for indirect labor.
(d) Additional manufacturing overhead costs of $108,000 were incurred and paid in cash.
(e) Manufacturing overhead costs of $130,000 were applied to jobs using the company’s
predetermined overhead rate.
(f) All of the jobs worked on during the month were completed and shipped to customers.
(g) The underapplied or overapplied overhead for the month was closed out to Cost of Goods
Sold.
Required:
a. Post the above transactions to T-accounts.
b. Determine the cost of goods manufactured.
c. Determine the cost of goods sold (after closing Manufacturing Overhead).
2-167
142. Schoff Corporation has provided the following data for the most recent month:
Raw materials, beginning balance $12,000
Work in process, beginning balance $24,000
Finished Goods, beginning balance $54,000
Transactions:
(1) Raw materials purchases $77,000
(2) Raw materials used in production (all direct materials) $80,000
(3) Direct labor $74,000
(4) Manufacturing overhead costs incurred $84,000
(5) Manufacturing overhead applied $78,000
(6) Cost of units completed and transferred from Work in Process to Finished Goods $244,000
(7) Any overapplied or underapplied manufacturing overhead is closed to Cost of Goods Sold ?
(8) Finished goods are sold $278,000
Required:
Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing
Overhead, and Cost of Goods Sold. Record the beginning balances and each of the transactions
listed above. Finally, determine the ending balances.
2-169
143. During January, Shanker Corporation recorded the following:
Raw materials, beginning balance $10,000
Work in process, beginning balance $24,000
Finished Goods, beginning balance $53,000
Transactions:
(1) Raw materials purchases $63,000
(2) Raw materials used in production (all direct materials) $62,000
(3) Direct labor $75,000
(4) Manufacturing overhead costs incurred $71,000
(5) Manufacturing overhead applied $66,000
(6) Cost of units completed and transferred from Work in Process to Finished Goods
$195,000
(7) Any overapplied or underapplied manufacturing overhead is closed to Cost of Goods Sold
?
(8) Finished goods are sold $222,000
Required:
Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing
Overhead, and Cost of Goods Sold. Record the beginning balances and each of the transactions
listed above. Finally, determine the ending balances.
2-171
144. Sowers Inc. has provided the following data for October:
Raw materials, beginning balance $11,000
Work in process, beginning balance $29,000
Finished Goods, beginning balance $58,000
Transactions:
(1) Raw materials purchases $67,000
(2) Raw materials used in production (all direct materials) $68,000
(3) Direct labor $52,000
(4) Manufacturing overhead costs incurred $78,000
(5) Manufacturing overhead applied $68,000
(6) Cost of units completed and transferred from Work in Process to Finished Goods $191,000
(7) Any overapplied or underapplied manufacturing overhead is closed to Cost of Goods Sold
?
(8) Finished goods are sold $244,000
Required:
Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing
Overhead, and Cost of Goods Sold. Record the beginning balances and each of the transactions
listed above. Finally, determine the ending balances.
2-173
145. Pirkl Corporation has provided the following data for the month of March:
Inventories: Beginning Ending
Raw materials $25,000 $30,000
Work in process $16,000 $18,000
Finished goods $36,000 $59,000
Additional information:
Raw materials purchases $71,000
Direct labor cost $83,000
Manufacturing overhead cost incurred $74,000
Indirect materials included in manufacturing overhead cost incurred $5,000
Manufacturing overhead cost applied to Work in Process $71,000
Required:
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold.
