Exercise 19-16 (30 minutes)
1. Overhead rate = Total overhead costs / Total direct labor costs
2.
Total cost of work in process inventory………………………….. $ 71,000
3.
Total cost of finished goods inventory…………………………… $490,000
We also know that the total of direct labor costs (X) and factory
Exercise 19-17 (20 minutes)
1.
a. Work in Process Inventory…………………………………….9,500
Raw Materials Inventory………………………………….. 9,500
To record direct materials used.
*Total of direct materials, direct labor, and overhead applied to this job in June ($11,040)
2. The balance in Work in Process Inventory at the end of July ($6,280)
equals the total cost reported on the job cost sheet for Job 122, the
Job 121 Job 122
Direct materials……………… $ 6,000 $2,500
Exercise 19-18 (35 minutes)
1. Estimated cost of the architectural job
Labor type
Estimated
hours Hourly rate Total cost
Architects…………………………………..150 $300 $ 45,000
Staff…………………………………………..300 75 22,500
2. Frey should first determine an estimated selling price, based on its cost
and desired profit for this job.
Total estimated cost……………………………………………………… $213,125
This $293,125 price may or may not be its bid. It must consider past
experiences and competition. It might make the bid at the low end of
a How accurate are its estimates of costs? If costs are understated,
b How accurate is the estimate of the competition’s probable bidding
c Is it willing to meet the expected low bid of the competition? In the
There is no exact answer to these questions, but Frey must consider
these and other factors before it submits the bid.
Exercise 19-19 (15 minutes)
(1) Raw Materials Inventory………………………………………..3,108
Work in Process Inventory*…………………………………..3,106
* The amount of raw materials used in production is computed from the Raw Materials
Inventory account. Beginning balance plus purchases minus ending balance equals
raw materials used in production, or (in millions), €83 + €3,108 – €85 = €3,106.
(2) The amount of materials purchased is almost equal to the amount of
PROBLEM SET A
Problem 19-1A (80 minutes)
Part 1 Total manufacturing costs and the costs assigned to each job
306 307 308 April Total
From March
Direct materials………………….$ 29,000 $ 35,000
For April
Direct materials………………….135,000 220,000 $100,000 455,000
*Equals 50% of direct labor cost.
Part 2 Journal entries for April
a. Raw Materials Inventory………………………………………..500,000
b. Work in Process Inventory…………………………………….455,000
d. Factory Overhead…………………………………………………23,000
e. Work in Process Inventory…………………………………….170,000
Problem 19-1A (continued)
f. [continued from prior page]
Factory Overhead…………………………………………………
50,000
Factory Overhead…………………………………………………19,000
Factory Overhead…………………………………………………51,000
Factory Overhead…………………………………………………32,000
g. Finished Goods Inventory (306 & 307)……………………..828,500
h. Cost of Goods Sold (306)……………………………………….321,500
i. Cash……………………………………………………………………635,000
Sales……………………………………………………………… 635,000
To record sale of job.
j. Cost of Goods Sold………………………………………………5,000
Problem 19-1A (Continued)
Part 3
MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct materials used………………………………………………………… $ 455,000
Direct labor used………………………………………………………………. 340,000
Part 4
Gross profit on the income statement for the month ended April 30
Sales……………………………………………………………………………………………. $ 635,000
Presentation of inventories on the April 30 balance sheet
Inventories
Raw materials ……………………………………………………………………………… $ 75,000*
* Beginning raw materials inventory………………………………………………………….$ 80,000
Purchases……………………………………………………………………………………………..500,000
Part 5