PROBLEM SET B
Problem 15-1B (80 minutes)
Part 1
Total manufacturing costs and the costs assigned to each job
114 115 116 Sept. Total
From August
Direct materials….….……….……….....$ 14,000 $ 18,000
Direct labor..……………………………….18,000 16,000
Direct labor ……..……….…….……….…30,000 68,000 120,000 218,000
Applied overhead*………………….…... 15,000 34,000 60,000 109,000
Total costs added in
September…………………………….…. 145,000 272,000 260,000 677,000
Part 2 Journal entries for September
a. Raw Materials Inventory…………………….….……….………400,000
Accounts Payable………………..….…….….…….………. 400,000
To record materials purchases.
b. Work in Process Inventory………………………………….….350,000
c. Work in Process Inventory………………………………….….218,000
Cash…………………………………………..………………….… 218,000
To record and pay direct labor.
d. Factory Overhead………………..…………………………………14,000
e. Work in Process Inventory………………………………….….109,000
Factory Overhead………….……………………………..….. 109,000
To apply overhead to jobs.
Problem 15-1B (Continued)
f. [continued from prior page]
Factory Overhead………………..…………………………………20,000
Cash…………………………………………..………………….… 20,000
To record other factory overhead (rent).
Factory Overhead………………..…………………………………30,000
Raw Materials Inventory………………..….…….……….. 30,000
To record indirect materials.
g. Finished Goods Inventory……………….………..….………..500,000
Work in Process Inventory…………………….…….…… 500,000
To record jobs completed ($186,000 + $314,000).
i. Cash…………..…………………………..……………………………..380,000
Sales………………..………………………….….……….……… 380,000
To record sale of job.
*Overhead applied to jobs……………………… $109,000
Overhead incurred
Indirect materials………………………………..….$30,000
Indirect labor……………………………………….… 14,000
Problem 15-1B (Continued)
Part 3
PEREZ MFG.
Schedule of Cost of Goods Manufactured
For Month Ended September 30
Direct materials used $350,000
Direct labor used…………………………………………………….…. 218,000
Factory overhead applied…………………………………………... 109,000
Total manufacturing costs………………….……..……….……… 677,000
Part 4
Gross profit on the income statement for the month ended September 30
Sales……………..…………………………..………………………………….………….. $380,000
Presentation of inventories on the September 30 balance sheet
Inventories
Raw materials …………………………………………….……………………………. $170,000*
Work in process (Job 116)……………………….………………….……….…… 260,000
* Beginning raw materials inventory……………………..…..........................$150,000
Purchases……………………………………………………………………………….....400,000
Direct materials used……………………………………………………………..……(350,000)
Problem 15-1B (Concluded)
Part 5
Problem 15-2B (75 minutes)
Part 1
a.
Dec. 31 Work in Process Inventory………………….….……….……..12,200
b.
Dec. 31 Work in Process Inventory………………………..….…….….13,000
Wages Payable…………….………….….…….…….………. 13,000
To record direct labor costs for
Jobs 603 and 604 ($5,000 + $8,000).
c.
Dec. 31 Work in Process Inventory………………………..….…….….26,000
d.
Dec. 31 Factory Overhead………………..…………………………………2,100
Raw Materials Inventory………………..….…….……….. 2,100
To add cost of indirect materials
to actual factory overhead.
e.
Dec. 31 Factory Overhead………………..…………………………………3,000
Problem 15-2B (Continued)
Part 2
Revised Factory Overhead account
Ending balance from trial balance……………………………….…..$27,000 Debit
Applied to Jobs 603 and 604………………………………..…….……(26,000) Credit
Dec. 31 Cost of Goods Sold…………….…………………………….……6,100
Factory Overhead………….……………………………..….. 6,100
Part 3
CAVALLO MFG.
Trial Balance
December 31, 2015
Debit Credit
Cash …………..………………………………..……….…….……….$ 64,000
Accounts receivable……………….…………………….………. 42,000
Raw materials inventory*………….…..……….….…….……. 11,700
Common stock ………….………………………………….……… 30,000
Retained earnings …………..…………………………..…….…. 87,000
Sales …………….…………………………..…………………..…….. 180,000
Cost of goods sold*** …………..……..……..……….…….…. 111,100
Problem 15-2B (Continued)
Part 3 (Concluded)
* Raw materials inventory
Balance per trial balance………………………………………………..…………..$26,000
** Work in process inventory
Job 603 Job 604 Total
Direct materials……………… $ 4,600 $ 7,600 $12,200
Direct labor……………………. 5,000 8,000 13,000
Part 4
CAVALLO MFG.
Income Statement
For Year Ended December 31, 2015
Sales……………..…………………………..………………..……….…….$ 180,000
Cost of goods sold………….………………………………….…….… (111,100 )
Gross profit………………………………………..………………….…… 68,900
Problem 15-2B (Concluded)
Part 4 (Concluded)
CAVALLO MFG.
Balance Sheet
December 31, 2015
Assets
Cash………………………………………..…………………… $ 64,000
Accounts receivable……………..……….…….….…… 42,000
Liabilities and equity
Accounts payable……………….………………………… $ 10,500
Wages payable…………….………………………………..
Notes payable………………..……………….….………...
16,000
13,500
Total liabilities……………………….……………………… 40,000
Common stock…………..…….…….……….….….……. 30,000
Retained earnings ($87,000 + $23,900)……………..… 110,900
Part 5
The $2,100 error would cause the costs for Job 604 to be understated.
Since Job 604 is in process at the end of the period, work in process
inventory and total assets would both be understated on the balance sheet.
Problem 15-3B (70 minutes)
Part 1
JOB COST SHEETS
Job No. 487
Materials………..….……...$30,000
Labor…………………….….8,000
Overhead…………….……. 16,000
Total cost……………….….$54,000
Job No. 488
Job No. 489
Materials………..….……...$12,000
Labor…………………….…. 25,000
Overhead…………….……. 50,000
Total cost……………….….$87,000
Job No. 490
Job No. 491
Materials………..….……...$ 4,000
Labor…………………….…. 2,000
Overhead…………….……. 4,000
Total cost……………….….$10,000