Problem 15-4A (35 minutes)
Part 1
a. Predetermined overhead rate
= = = 60%
Estimated overhead costs
Estimated direct labor cost
$1,500,000
$2,500,000
$1,500,000
[50 x 2,000 x $25]
Problem 15-5A (80 minutes)
JOB COST SHEET
Customer’s Name
Worldwide Company
Job No.
102
Direct Materials
Direct Labor
Overhead Costs Applied
Date
Requisition
Number
Amount
Time
Ticket
Number
Amount
Date
Rate
Amount
#35
33,750
#1–10
90,000
May —
80%
72,000
#36
12,960
SUMMARY OF COSTS
Dir. Materials ………..…………………
46,710
Dir. Labor ……………..……………
90,000
Overhead ……………..……………
72,000
Total cost of Job …..………………………
208,710
Total
46,710
Total
90,000
FI N I S H E D
JOB COST SHEET
Customer’s Name
Reuben Company
Job No.
103
Direct Materials
Direct Labor
Overhead Costs Applied
Date
Requisition
Number
Amount
Time
Ticket
Number
Amount
Date
Rate
Amount
#37
17,500
#11–30
65,000
May —
80%
52,000
#38
6,840
SUMMARY OF COSTS
Dir. Materials ………..…………………
Dir. Labor ……………..……………
Overhead ……………..……………
______
Total cost of Job …..………………………
.
Total
Total
Problem 15-5A (Continued)
MATERIALS LEDGER CARD
Item
Material M
Received
Issued
Balance
Date
Receiving
Report
Units
Unit
Price
Total
Price
Requi–
sition
Units
Unit
Price
Total
Price
Units
Unit
Price
Total
Price
May 1
200
250
50,000
#426
250
250
62,500
450
250
112,500
#35
135
250
33,750
315
250
78,750
#37
70
250
17,500
245
250
61,250
Received
Issued
May 1
180
90
180
16,200
185
180
#36
72
180
113
180
MATERIALS LEDGER CARD
Item
May 1
15
Problem 15–5A (Continued)
GENERAL JOURNAL
a.
Raw Materials Inventory ………………………………………..
78,700
Accounts Payable ………………………………………..…..
78,700
To record materials purchases ($62,500+$16,200).
d.
Work in Process Inventory* ……………………………….…..
155,000
Factory Overhead …………………………..……………………..
19,250
Cash ………………………………………………………………..
174,250
To record direct & indirect labor.
*($90,000 + 65,000)
Factory Overhead …………………………..……………………..
102,000
Cash ………………………………………………………………..
102,000
To record other factory overhead.
e.
Finished Goods Inventory ……………………………………..
208,710
Work in Process ………………………………………….…..
208,710
To record completion of jobs.
f.
Accounts Receivable ………………………………………..…..
400,000
Sales …………………………………………………………..…..
400,000
To record sales on account.
Cost of Goods Sold …………………………..…………………..
208,710
Finished Goods Inventory ………………………………..
208,710
To record cost of sales.
h.
Work in Process Inventory* ……………………………….…..
71,050
Factory Overhead …………………………..……………………..
1,125
Raw Materials Inventory …………………………………..
72,175
To record direct & indirect materials.
*($33,750 + $12,960 + $17,500 + $6,840)
i.
Work in Process Inventory …………………………..………..
124,000
Factory Overhead …………………………..………………..
124,000
To apply overhead ($72,000 + 52,000).
Problem 15–5A (Continued)
j. The ending balance in the Factory Overhead account is computed as:
Actual Factory Overhead
Miscellaneous overhead …………………….
$102,000
Indirect materials ……………………………….
1,125
Indirect labor …………………………..……..….
19,250
Total actual factory overhead ………….….
122,375
Factory overhead applied ………………….….
124,000
Overapplied overhead ……………………….….
$ (1,625)
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
Applied overhead* ………………………
9,000
8,000
Beginning goods
In process ………………………..…
41,000
42,000
$ 83,000
For September
Direct materials …………………..………
100,000
170,000
$ 80,000
350,000
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
Total costs …………………………..
$186,000
$314,000
$260,000
$760,000
*Equals 50% of direct labor cost.
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
Raw Materials Inventory …………………………….……..
350,000
To assign direct materials to jobs.
c.
Work in Process Inventory ……………………………………..
218,000
Cash ………………………………………………………………..
218,000
To record and pay direct labor.
d.
Factory Overhead…………………………..……………….……..
14,000
Cash ………………………………………………………………..
14,000
To record and pay indirect labor.
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…………………………..……………….……..
12,000
Cash ………………………………………………………………..
12,000
To record other factory overhead (utilities).
Factory Overhead…………………………..……………….……..
30,000
Accum. Depreciation—Factory Equip ………………..
30,000
To record other factory overhead (depreciation).
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).
h.
Cost of Goods Sold ………………………………………………..
186,000
Finished Goods Inventory …………………………..
186,000
To record cost of sale of job.
i.
Cash ……………………………………………………………………..
380,000
Sales ………………………………………………………………..
380,000
To record sale of job.
j.
Factory Overhead* ………………………………………….……..
3,000
Cost of Goods Sold…………………………………….……..
3,000
To assign overapplied overhead.
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
Add work in process August 31 (Jobs 114 & 115) ………....
83,000
Total cost of work in process ……………………………………..
760,000
Deduct work in process, September 30 (Job 116) ………...
(260,000)
Cost of goods manufactured ……………………………………...
$500,000
Part 4
Gross profit on the income statement for the month ended September 30
Sales …………………………………………………………………………………………
$380,000
Cost of goods sold ($186,000 – $3,000) …………………………………….…
(183,000)
Gross profit …………………………………………………………………………….…
$197,000
Presentation of inventories on the September 30 balance sheet
Inventories
Raw materials ……………………………………………………………………….…
$170,000*
Work in process (Job 116) ……………………………………………………….
260,000
Finished goods (Job 115) ……………………………………………………….
314,000
Total inventories ………………………………………………………………………
$744,000
* Beginning raw materials inventory …………………………..
$150,000
Purchases ……………………………………………………….
400,000
Direct materials used ……………………………………………………….
(350,000)
Indirect materials used…………………………….…………………………
(30,000)
Ending raw materials inventory ………………..…………
$170,000
Problem 15–1B (Concluded)
Part 5
Problem 15-2B (75 minutes)
Part 1
a.
Dec. 31
Work in Process Inventory …………………………..
12,200
Raw Materials Inventory ………………………..…
12,200
To record direct materials costs for
Jobs 603 and 604 ($4,600 + $7,600).
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
Factory Overhead…………………………..……..………….
26,000
To allocate overhead to Jobs 603 and 604 at
200% of direct labor cost assigned to them.
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
Wages Payable ……………………………………..………….
3,000
To accrue cost of indirect labor.
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
Additional indirect materials…………………………..……………….
2,100
Debit
Additional indirect labor………………………………………………….
3,000
Debit
Underapplied overhead ……………………………………………….….
$ 6,100
Debit
Cash …………………………..………………………………………..
Accounts receivable ……………………………………………...
Raw materials inventory* …………………………..…………..
Accounts payable …………………………..…………………....
Common stock ……………………………………………………..
Retained earnings ………………………………………………...
Factory overhead …………………………………………………..