Problem 15–5B (Continued)
j. The ending balance in Factory Overhead is computed as:
Actual Factory Overhead
Miscellaneous overhead …………..
$36,800
Indirect materials ……………………..
864
Indirect labor …………………………...
12,000
Total actual factory overhead ……
49,664
Factory overhead applied ……………
50,400
Overapplied overhead …………………
$ (736)
1. The cost of direct materials requisitioned in the month equals the total
direct materials costs accumulated on the three jobs less the amount of
1. We would anticipate that at least two types of costs will increase as a
percent of sales with Apple’s growth in sales. The first type is broadly
classed into variable costs. Variable costs are the usual operating costs
2. Both types of costs identified in part 1 are likely to increase as Apple
increases sales. Examples of specific items include communication,
advertising, training, travel, and management costs. In addition, if
growth is sufficiently large to push Apple’s sales beyond its current
3. Solution depends on the annual report information obtained.
1. Actual inventory changes and operating cash flow effects as found on
the cash flow statement (amounts are in $millions)
Apple
Current Year
One Year
Prior
Two Years
Prior
Inventory change ………..………………
Increase
Increase
Decrease
Operating cash
flow effect from
inventory change ………..………………
Decrease of
$973
Decrease of
$15
Increase of
$275
Google
Current Year
One Year
Prior
Two Years
Prior
Inventory change ………..………………
Increase
Decrease
Increase
Operating cash
flow effect from
inventory change ………..………………
Decrease of
$30
Increase of
$301
Decrease of
$234
2. A successful JIT system should reduce inventory levels. This reduction
in inventory should increase operating cash flows. In the solution of
part 1, notice that decreases in inventory yield increases in operating
3. This is a one-time occurrence of a release of cash. However, this one–
time adjustment can yield a recurring impact on returns if such freed up
resources are directed into productive assets. Moreover, this
adjustment should not reverse provided the JIT inventory system can
maintain the reduced inventory levels.
1. You recommend replacing the general accounting (periodic inventory)
system with a cost accounting (perpetual inventory) system—
specifically a job order cost accounting system. Cost accounting
2. This new system would require use of many different documents to
control the acquisition, use, and availability of materials. It also requires
3. The focal point of the new system is the job cost sheet, which is used to
accumulate and tally costs of goods as produced for each specific job
order and job lot. You could prepare a sample and explain and illustrate
how the system determines unit costs as production is completed.
1. A medical clinic can be considered as appropriate for a job order cost
accounting system. This is because each patient is unique in many
2. In light of the differences identified in part 1, the doctors will consider
the individual characteristics of every patient in determining the type
1. A job cost sheet for a service company would likely not have any costs
2. Examples of direct labor and overhead costs for Middleton Made Knives
include:
Direct Labor: Wages/salaries of knife–makers (assuming Quintin’s
1. The framework for the job cost sheet should follow that in the third
exhibit in the chapter. This includes the descriptions for: company
2. Results of the comparison of job cost sheets to a builder’s actual job
cost sheets depend on the builder chosen and the format used.
1. Actual inventory amounts and changes. Apple’s amounts are in $millions
and Samsung’s amounts are in millions of Korean won.
Apple ($millions)
Balance,
Current Year
Balance,
Prior Year
Change in
Inventory
Inventory …………………….…….
$1,764
$791
$973 Increase
Operating cash
flow effect from
inventory change ………..………………
Decrease of
$973
Samsung (₩millions)
Balance,
Current Year
Balance,
Prior Year
Change in
Inventory
Inventory …………………….…….
₩19,134,868
₩17,747,413
₩1,386,755
Increase
Operating cash
flow effect from
inventory change ………..………………
Decrease
₩1,386,755
2. A successful JIT system should reduce inventory levels. This reduction
in inventory should increase operating cash flows. In the solution of
part 1, notice that increases in inventory yield decreases in operating
3. We cannot definitively determine which company of the two would
benefit the most from JIT implementation. The benefit of JIT would