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143.
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144.
Silverton Manufacturing Company builds highly sophisticated engine parts for cars
competing in stock racing and drag racing. The company uses a normal costing system
that applies factory overhead on the basis of direct labor-hours. For 2016, the company
estimated that it would incur $256,000 in factory overhead costs and 16,000 direct labor-
hours. The April 1, 2016, balance in inventory accounts follow:
Materials Inventory
$54,000
Work-in-Process Inventory (Y12)
$21,000
Finished Goods Inventory (Z11)
$108,000
Job Y12 is the only job in process on April 1, 2016. The following transactions were
recorded for the month of April:
a. Purchased materials on account, $180,000.
b. Issued $182,000 of materials to production, $8,000 of which was for indirect materials.
Cost of direct materials issued:
Job Y12
$46,000
Job D20
84,000
Job E33
44,000
c. Incurred and paid payroll cost of $40,920; Direct labor cost ($20/hour; total 1,196
hours):
Job Y12
$12,220
Job D20
8,060
Job E33
3,640
Indirect labor
5,000
Selling and administrative salaries
12,000
d. Recognized depreciation for the month:
Manufacturing asset $4,400
Selling and administrative asset 3,400
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145.
Ryan & Marks, Design Consultants has the following budget for the year:
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Direct labor (for professional hours
charged to clients)
$202,000
Overhead
Indirect materials
10,000
Indirect labor
150,000
Depreciation - Building
50,000
Depreciation - Furniture
5,000
Utilities
12,000
Insurance
4,800
Property taxes
5,200
Other expenses
3,380
Total
$240,380
The firm uses direct labor as the cost driver to apply overhead to clients. During January,
the firm worked for many clients; data for two of them follow:
Henderson account
Direct materials
$400
Direct labor
$3,000
Fisher account
Direct materials
$5,380
Direct labor
$12,600
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146.
The following information is for Ogden Company for the month of November:
a. Factory overhead costs are applied to jobs at the predetermined rate of $80 per labor-
hour. Job X-14 incurred 2,300 labor-hours; Job SM-4 used 1,850 labor-hours.
b. Job X-14 was shipped to customers during November. Job X-14 had a gross margin of
24 percent based on manufacturing cost.
c. Job SM-4 was still in process at the end of November.
The company closed the overapplied or underapplied overhead to the Cost of Goods Sold
account at the end of November.
d. Factory utilities, factory depreciation, and factory insurance incurred is summarized by
these factory vouchers, invoices, and cost memos:
Utilities
$44,500
Depreciation
53,500
Insurance
38,600
e. The Company purchased the following direct materials and indirect materials:
Material A
$6,000
Material B
7,000
Indirect materials
4,250
Total
$17,250
f. Direct materials and indirect materials used are as follows:
Job X-14
Job SM-4
Total
Material A
$5,450
$33,000
$38,450
Material B
1,650
25,500
27,150
Subtotal
$7,100
$58,500
$65,600
Indirect materials
66,500
Total
$132,100
g. Factory labor incurred for the two jobs and indirect labor is as follows:
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Job X-14
$32,200
Job SM-4
25,900
Indirect labor
122,000
Total
$180,000
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147.
Nash Company manufactured two products, A and B, during April. For purposes of product
costing, an overhead rate of $2.50 per direct-labor hour was used, based on budgeted
annual factory overhead of $500,000 and 200,000 budgeted annual direct-labor hours, as
follows:
Budgeted
Overhead
Budgeted
Hours
Department 1
$300,000
100,000
Department 2
200,000
100,000
Total
$500,000
200,000
The number of labor hours required to manufacture each of these products was:
Product A
Product B
In Department 1
3
1
In Department 2
1
3
Total
4
4
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148.
Technical Measurement Company manufactures precision-measuring devices used by
industrial companies in various capacities. The devices are produced in two stages:
Assembly and Testing. The company has no beginning inventories because all units
produced last year were sold by the end of the year. At the beginning of the year, the
company has an order of 8,000 units. The company's predetermined overhead rate is
based on materials used in assembly and direct labor hours in testing. Information
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concerning the predetermined overhead rates appears below: Direct labor is paid $20 per
hour.
Assembly
Testing
Budgeted Overhead:
$1,000,000
$500,000
Budgeted material use
2,000,000
50,000
Budgeted direct labor
hours
200,000
100,000
Budgeted direct labor cost
3,000,000
1,500,000
Other information regarding the production
process:
Assembly
Testing
Materials requisitioned
$2,200,000
$48,000
Direct labor cost
3,100,100
1,575,000
Actual overhead cost
1,200,000
475,000
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149.
Tidy Furniture Company uses a job-order cost system. The following debits (credits)
appeared in the Work-in-Process account for February 2016:
Description
Debits
Credits
June 1
Balance
$20,000
Entire
month
Direct Materials
80,000
Entire
month
Direct Labor
60,000
Entire
month
Manufacturing
overhead
45,000
Entire
month
$120,000
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