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122.
A manufacturing company employs job costing to account for its costs. There are three
production departments, and separate departmental overhead application rates are
employed because the operations of the departments are so different. 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 101 and Job 102 were completed during the current month. (CIA
Examination adapted)
Production
Departments
Direct
Labor
Rate
Manufacturing
overhead
application rates
Department 1
$12.00
50% of direct
materials
Department 2
$18.00
$8.00 per machine
hour
Department 3
$15.00
75% of direct labor
cost
Job
101
Job
102
Beginning Work-in–
Process
$25,500
$32,400
Direct materials:
Department 1
$40,000
$26,000
Department 2
$3,000
$5,000
Department 3
$-0-
$-0-
Direct labor hours:
Department 1
500
400
Department 2
200
250
Department 3
1,500
1,800
Machine hours:
Department 1
-0-
-0-
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Department 2
1,200
1,500
Department 3
1,500
1,800
Department 1
40,000
26,000
58,000
Department 1
20,000
13,000
29,000
Department 2
12,000
21,600
123.
Kid’s World Manufacturing Company is a manufacturer of furnishings for infants and
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children. The company uses job costing and employs a full absorption accounting method
for cost accumulation. Kid’s World Work–in-Process Inventory on April 30 consisted of the
following jobs:
Job No.
Items
Units
Accumulated Cost
CBSI02
Cribs
20,000
$900,000
PLP086
Playpens
15,000
420,000
DRS114
Dressers
25,000
250,000
Total
$1,570,000
Kid’s World applies manufacturing overhead on the basis of direct labor-hours. The
company’s estimated manufacturing overhead for the period ending May 31 totals
$4,500,000; the company estimated it would use 600,000 direct labor-hours during the
year.
At the end of April, the balance in Kid’s World Materials Inventory, which includes both
materials and purchased parts, was $668,000. Additions to, and requisitions from, the
materials inventory during the month of May included the following:
Materials
Purchased
Parts
Purchased
$242,000
$396,000
Requisitions:
Job CBS102
51,000
104,000
Job PLP086
3,000
10,800
Job DRS114
124,000
87,000
Job STR077 (10,000
strollers)
62,000
81,000
Job CRG096 (5,000
carriages)
65,000
187,000
During the month of May, Kid’s World factory payroll consisted of the following:
Hours
Cost
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Job CBS102
12,000
$122,400
Job PLP086
4,400
43,200
Job DRS114
19,500
200,500
Job STR077
3,500
30,000
Job CRG096
14,000
138,000
Indirect supervision
57,600
Total
$591,700
Listed below are the jobs that were completed and the units that were sold during the
month of May.
Job No.
Items
Quantity
Completed
CBS102
Cribs
20,000
PLP086
Playpens
15,000
STR077
Strollers
10,000
CRG096
Carriages
5,000
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124.
125.
The Focus Company does not maintain backup documents for its computer files. In June,
some of the current data were lost, and you have been asked to help reconstruct the data.
The following beginning balances are known:
Direct materials inventory
$24,000
Work-in-process inventory
9,000
Finished goods inventory
22,000
Manufacturing overhead control
33,000
Accounts payable
12,000
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126.
Windham 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)
Production
Dept
Direct
Labor
Rate
Manufacturing
overhead application
rate
Cutting
$14.00
40% of direct materials
Machining
$20.00
$10.00 per machine hour
Assembly
$22.00
80% of direct labor cost
Job 611
Job 612
Job 613
Beginning WIP
$52,500
$16,200
$-0-
Direct materials:
Cutting
50,000
32,000
76,000
Machining
4,000
7,000
19,000
Assembly
-0-
-0-
-0-
Direct labor hours:
Cutting
500
400
600
Machining
800
750
850
Assembly
1,100
1,200
3,500
Machine hours:
Cutting
-0-
-0-
-0-
Machining
2,200
1,800
3,400
Assembly
500
800
750
Required:
(a) Compute the completed costs of Job 611 and Job 613.
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127.
Carlson Corporation applies overhead based upon machine-hours. Budgeted factory
overhead was $266,400 and budgeted machine-hours were 18,500. Actual factory
overhead was $287,920 and actual machine-hours were 19,050. Before disposition of over–
or underapplied overhead, the cost of goods sold was $560,000 and ending inventories
were as follows:
Direct materials
$60,000
WIP
190,000
Finished goods
250,000
Total
$500,000
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.
(a) $274,320
Cost of goods sold
Finished goods
Cost of goods sold
COGS
128.
Job 7890 was recently completed. The following data have been recorded on its job cost
sheet:
Direct materials
$45,000
Direct labor-hours
630 labor-hours
Direct labor wage rate
$13 per labor-hour
Machine-hours
390 machine-hours
Number of units completed
3,000 units
Total cost
Unit product cost
129.
Job 5432 was recently completed. The following data have been recorded on its job cost
sheet:
Direct materials
$40,610
Direct labor-hours
1,147 DLHs
Direct labor wage rate
$11 per DLH
Number of units completed
3,100 units
Direct materials
1,147 DLHs
130.
131.
132.
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133.
Wang’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:
WIP
$150,000
Finished goods
375,000
Total
$525,000
Cost of goods sold
WIP
Finished goods
Cost of goods sold
134.
Harkin Corporation bases its predetermined overhead rate on the estimated machine–
hours for the upcoming year. Data for the upcoming year appear below:
Estimated machine-hours
73,000
Estimated variable
manufacturing overhead
$3.49
per
machine-
hour
Estimated total fixed
manufacturing overhead
$838,770