122. The financial records for the Lee Manufacturing Company have been destroyed in a flood.
The following information has been obtained from a separate set of books maintained by the cost
accountant. The cost accountant now asks for your assistance in computing the missing amounts.
Required:
Compute the following:
(a) Direct materials purchased
(b) Ending Work-in-process inventory
(c) Beginning Finished goods inventory
123. The Bisson Company had the following transactions and events during its first year of
operations. Estimated overhead for the year was $770,000; estimated direct labor cost for the year
was $350,000.
a. Purchased materials on account, $567,000.
b. Requisitioned materials for production as follows: direct materials – 85 percent of purchases,
indirect materials – 12 percent of purchases
c. Direct labor for production is $331,000, indirect labor is $125,000.
d. Overhead incurred (not including materials or labor): $529,000.
e. Overhead is applied to production based on direct labor cost at the rate of ___ percent.
f. Goods costing $976,000 were completed during the period.
g. Goods costing $513,200 were sold on account for $776,000.
Required:
Determine the ending balances for:
(a) Materials inventory
(b) Work-in-process inventory
(c) Finished goods inventory
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124. The Brisebois Company had the following transactions and events during its first year of
operations. Estimated overhead for the year was $770,000; estimated direct labor cost for the year
was $350,000.
a. Purchased materials on account, $567,000.
b. Requisitioned materials for production as follows: direct materials – 85 percent of purchases,
indirect materials – 12 percent of purchases
c. Direct labor for production is $331,000, indirect labor is $125,000.
d. Overhead incurred (not including materials or labor): $529,000.
e. Overhead is applied to production based on direct labor cost at the rate of ___ percent.
f. Goods costing $976,000 were completed during the period.
g. Goods costing $513,200 were sold on account for $776,000.
Required:
(1) Prepare the journal entries to record the transactions for the year.
(2) Prepare the journal entry to prorate the Over- or underapplied overhead to the appropriate
accounts.
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125. In February, Forester Engineering worked on three contracts: 1,200 hours for Tarvell
Company, 1,100 hours for Natron LLC and 3,400 for Lisere Corp. Forester bills clients at the rate
of $150 per hour; labor cost for its engineering staff is $45 per hour. The total number of hours
worked in February was 6,000 (any untraced hours are considered overhead), and non-labor
overhead costs were $325,000. Overhead is applied to clients at $55 per labor-hour. In addition,
Forester had $243,000 in marketing and administrative costs. All transactions are on account. All
services were billed.
Required:
a. Determine the cost of each of the three jobs.
b. What is the amount of Over- or underapplied overhead?
c. How much operating profit did Forester make in February? Assume the Over– or underapplied
overhead is not closed out each month.
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126. Mounder Manufacturing Company employs job costing to account for its costs. There are
three production departments, and separate departmental overhead application rates are
employed. All jobs generally pass through all three production departments. Data regarding the
hourly direct labor rates, overhead application rates, and three jobs on which work was done
during the month appear below. Job 611 and Job 613 were completed during the current month,
Job 612 was still in process. (CIA Examination adapted)
Required:
(a) Compute the completed costs of Job 611 and Job 613.
(b) Compute the value of the Work–in-Process Inventory at the end of the month.
127. Misa Company applies overhead based upon labor-hours. Budgeted factory overhead was
$910,000 and budgeted labor-hours were 32,500. Actual factory overhead was $893,675 and
actual labor-hours were 31,560.
Required:
a. Compute the overhead application rate.
b. Compute the amount of overhead applied to production.
c. Determine the amount of Over– or underapplied overhead.
128. Becker Company applies overhead at a rate of $26 per direct labor hour. Budgeted labor
hours were 25,000; actual labor hours exceeded the budget by 1,600 hours. Overhead was
overapplied by $3,758.
Required:
(a) Compute the budgeted overhead for the year.
(b) Compute actual overhead for the year.
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129. Bailey’s Corporation applies overhead based upon machine-hours. Budgeted factory
overhead was $325,000 and budgeted machine-hours were 13,000. Actual factory overhead was
$312,330 and actual machine-hours were 12,660. Before disposition of Over– or underapplied
overhead, the cost of goods sold was $725,000 and ending inventories were as follows:
Required:
a. Compute the amount of overhead applied to production.
b. Prepare the journal entry to dispose of the over/under-applied overhead using the write-off to
cost of goods sold approach.
c. Prepare the journal entry to dispose of the over/under-applied overhead using the proration
approach.
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130. The Perrot Company is a computer repair shop and had the following transactions and
events during the year. Estimated overhead for the year was $175,000; estimated labor for the
year was 6,000 hours.
a. Purchased materials on account, $126,000.
b. Traced materials to repair jobs $110,880; general shop materials used $9,500.
c. Labor traced to repair jobs $165,000, untraced labor was $22,200.
d. Overhead incurred (not including materials or labor): $139,600.
e. Overhead is applied to repair jobs based on labor hours. All workers were paid $30/hr.
f. Ending work-in-process consisted of one repair job with a cost of $1,976. There was no
beginning work-in–process.
g. Repair jobs were billed to the customers for $476,000.
Required:
(1) Prepare the journal entries to record the transactions for the year.
(2) Prepare the journal entry to write-off the Over- or underapplied overhead to the cost of repair
jobs.
(3) What would Perrot’s operating profit for the year?
131. Sandler Corporation bases its predetermined overhead rate on the estimated machine–
hours for the upcoming year. Data for the upcoming year appear below:
Required:
Compute the company’s predetermined overhead rate.
132. Wahr Corporation bases its predetermined overhead rate on the estimated labor-hours for
the upcoming year. At the beginning of the most recently completed year, the company estimated
the labor-hours for the upcoming year at 32,000 labor-hours. The estimated variable
manufacturing overhead was $7.17 per labor-hour and the estimated total fixed manufacturing
overhead was $584,320. The actual labor-hours for the year turned out to be 33,300 labor-hours.
Required:
Compute the company’s predetermined overhead rate for the recently completed year.
133. Escatel Corporation bases its predetermined overhead rate on the estimated labor-hours
for the upcoming year. Data for the most recently completed year appear below:
Required:
Compute the company’s predetermined overhead rate for the recently completed year.
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134. Dobrinski Corporation bases its predetermined overhead rate on the estimated labor–
hours for the upcoming year. At the beginning of the most recently completed year, the company
estimated the labor-hours for the upcoming year at 13,000 labor-hours. The estimated variable
manufacturing overhead was $2.35 per labor-hour and the estimated total fixed manufacturing
overhead was $156,130.
Required:
Compute the company’s predetermined overhead rate.
135. During June, Catlin Corporation purchased $76,000 of raw materials on credit to add to its
raw materials inventory. A total of $81,000 of raw materials was requisitioned from the storeroom
for use in production. These requisitioned raw materials included $5,000 of indirect materials.
Required:
Prepare journal entries to record the purchase of materials and their use in production.
136. Glen Lake Corporation recorded the following transactions for the just completed month:
a. $60,000 in raw materials were purchased on account.
b. $51,000 in raw materials were requisitioned for use in production. Of this amount, $42,000 was
for direct materials and the remainder was for indirect materials.
c. Total labor wages of $92,000 were incurred and paid. Of this amount, $81,000 was for direct
labor and the remainder was for indirect labor.
d. Additional manufacturing overhead cost of $155,000 were incurred. All were on account.
Required:
Record the above transactions in journal entries.
137. During August, Allee Corporation incurred $64,000 of actual Manufacturing Overhead
costs. During the same period, the Manufacturing Overhead applied to Work–in-Process was
$66,000.
Required:
Prepare journal entries to record the incurrence of manufacturing overhead and the application of
manufacturing overhead to Work–in-Process.