Problem 3-25 (continued)
2.
Gitano Products
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning ……………
$ 20,000
Add purchases of raw materials …………………
510,000
Total raw materials available …………………….
530,000
Deduct raw materials inventory, ending ………
80,000
Raw materials used in production…………………
$ 450,000
Direct labor ……………………………………………..
90,000
Manufacturing overhead applied to work in
process ………………………………………………..
720,000
Total manufacturing costs ………………………….
1,260,000
Add: Work in process, beginning ………………….
150,000
1,410,000
Deduct: Work in process, ending …………………
70,000
Cost of goods manufactured ……………………….
$1,340,000
3.
Unadjusted cost of goods sold:
Finished goods inventory, beginning ………………
$ 260,000
Add: Cost of goods manufactured ………………….
1,340,000
Goods available for sale ………………………………
1,600,000
Deduct: Finished goods inventory, ending ……….
400,000
Unadjusted cost of goods sold ………………………
$1,200,000
The underapplied overhead can either be closed out to Cost of Goods
Sold or allocated between Work in Process, Finished Goods, and Cost of
Goods Sold based on the overhead applied during the year in the ending
balance in each of these accounts.
4.
Direct materials …………………………..……………….
$ 8,500
Direct labor …………………………………………………
2,700
Overhead applied ($8,500 × 160%) …………………
13,600
Total manufacturing cost ……………………………….
$24,800
$24,800 × 125% = $31,000 price to the customer
Problem 3-25 (continued)
5. The amount of overhead cost in Work in Process was:
$24,000 direct materials cost × 160% = $38,400
The amount of direct labor cost in Work in Process is:
$70,000
$24,000
38,400
62,400
$ 7,600
The completed schedule of costs in Work in Process was:
$24,000
7,600
38,400
$70,000
Problem 3-26 (120 minutes)
1.
a.
Raw Materials ………………………………
200,000
Accounts Payable …………………….
200,000
b.
Work in Process …………………………...
185,000
Raw Materials ………………………….
185,000
c.
Manufacturing Overhead ………………..
63,000
Utilities Expense …………………………..
7,000
Accounts Payable …………………….
70,000
d.
Work in Process …………………………...
230,000
Manufacturing Overhead ………………..
90,000
Salaries Expense …………………………..
110,000
Salaries and Wages Payable ……….
430,000
e.
Manufacturing Overhead ………………..
54,000
Accounts Payable …………………….
54,000
f.
Advertising Expense ………………………
136,000
Accounts Payable …………………….
136,000
g.
Manufacturing Overhead ………………..
76,000
Depreciation Expense…………………….
19,000
Accumulated Depreciation ………….
95,000
h.
Manufacturing Overhead ………………..
102,000
Rent Expense ………………………………
18,000
Accounts Payable …………………….
120,000
i.
Work in Process …………………………...
390,000
Manufacturing Overhead ……………
390,000
Estimated total manufacturing overhead cost
Predetermined =
overhead rate Estimated total amount of the allocation base
$360,000
= = $400 per DLH
900 DLHs
975 actual DLH × $400 per DLH = $390,000
Problem 3-26 (continued)
2.
Accounts Receivable
Sales
(k)
1,200,000
(k)
1,200,000
Raw Materials
Cost of Goods Sold
Bal.
30,000
185,000
(k)
800,000
(a)
200,000
(b)
Bal.
45,000
Work in Process
Manufacturing Overhead
Bal.
21,000
(j)
770,000
(c)
63,000
(i)
390,000
(b)
185,000
(d)
90,000
(d)
230,000
(e)
54,000
(i)
390,000
(g)
76,000
Bal.
56,000
(h)
102,000
Bal.
5,000
Finished Goods
Advertising Expense
Bal.
60,000
(k)
800,000
(f)
136,000
(j)
770,000
Bal.
30,000
Accumulated Depreciation
Utilities Expense
(g)
95,000
(c)
7,000
Accounts Payable
Salaries Expense
(a)
200,000
(d)
110,000
(c)
70,000
(e)
54,000
Depreciation Expense
(f)
136,000
(g)
19,000
(h)
120,000
Salaries & Wages Payable
Rent Expense
(d)
430,000
(h)
18,000
Problem 3-26 (continued)
5.
Froya Fabrikker A/S
Income Statement
Sales ……………………………………………..
$1,200,000
Cost of goods sold …………………………….
795,000
Gross margin …………………………………..
405,000
Selling and administrative expenses:
Advertising expense ………………………..
$136,000
Utilities expense …………………………….
7,000
Salaries expense …………………………….
110,000
Depreciation expense ………………………
19,000
Rent expense ………………………………..
18,000
290,000
Net operating income ………………………..
$ 115,000
6.
Direct materials …………………………..…………………….
$ 8,000
Direct labor ………………………………………………………
9,200
Manufacturing overhead applied
(39 hours × $400 per hour) ………………………………
15,600
Total manufacturing cost …………………………………….
32,800
Add markup (60% × $32,800) ……………………………..
19,680
Total billed price of Job 412 …………………………………
$52,480
$52,480 ÷ 4 units = $13,120 per unit
Problem 3-27 (continued)
i.
Finished Goods ………………………………..
675,000
Work in Process …………………………..
675,000
j.
Cash ………………………………………………
1,250,000
Sales …………………………………………
1,250,000
Cost of Goods Sold …………………………...
700,000
Finished Goods …………………………...
700,000
2.
Raw Materials
Work in Process
Bal.
25,000
(b)
280,000
Bal.
10,000
(i)
675,000
(a)
275,000
(b)
220,000
Bal.
20,000
(c)
180,000
(h)
297,000
Bal.
32,000
Finished Goods
Manufacturing Overhead
Bal.
40,000
(j)
700,000
(b)
60,000
(h)
297,000
(i)
675,000
(c)
72,000
Bal.
15,000
(d)
13,000
(e)
57,000
(g)
88,000
Bal.
7,000
Cost of Goods Sold
(j)
700,000
3. Manufacturing overhead is overapplied by $7,000 for the year. The en-
Manufacturing Overhead ……………………………….
Cost of Goods Sold ………………………………….