Comprehensive Problem (Continued)
Part 4 (Using weighted-average)
General ledger accounts
Raw Materials Inventory
Acct. No. 132
Date
Explanation
Debit
Credit
Balance
June
30
Balance
25,000
(a)
Purchases
125,000
150,000
(b)
Usage
62,440
87,560
Balance
(b)
Direct materials
60,575
(c)
Overhead allocation
101,125
363,950
(g)
Transfer to Fin. Goods
92,800
Balance
(g)
July sales
115,450
Comprehensive Problem (Concluded)
Part 4 (Using weighted-average)
Factory Payroll Payable
Acct. No. 212
Date
Explanation
Debit
Credit
Balance
(c)
Direct labor
202,500
202,500
(c)
(d)
Indirect labor
Payment
25,000
227,250
227,250
0
Sales
Acct. No. 413
Date
Explanation
Debit
Credit
Balance
(h)
July sales
625,000
625,000
Cost of Goods Sold
Acct. No. 502
Date
Explanation
Debit
Credit
Balance
(h)
July sales
265,700
265,700
Factory Overhead
Acct. No. 540
Date
Explanation
Debit
Credit
Balance
(b)
Indirect materials
10,000
10,000
(c)
Indirect labor
25,000
35,000
(e)
Other overhead costs
80,000
115,000
(f)
Overhead application
101,125
13,875
Cost of goods sold* …………………………………………………………………
Comprehensive Problem (Continued)
Part 2 (Using FIFO)
MAJOR LEAGUE BAT CO.
Process Cost Summary (FIFO)
For Month Ended July 31
Costs Charged to Production
Costs of beginning work in process
Direct materials ………………………………………………….……
$ 2,660
Conversion ………………………………………………………..…….
5,475
$ 8,135
Costs incurred this period
Direct materials ………………………………………………….……
52,440
Conversion ………………………………………………………..…….
303,375
355,815
Total costs to account for …………………………………….…….
$363,950
Unit cost information
Units to account for
Units accounted for
Beginning work in process …………………………..
5,000
Complete & transferred out………….
11,000
Units started this period ………..…………………
14,000
Ending work in process……………….
8,000
Total units to account for …………………………..
19,000
Total units accounted for …………….
19,000
Equivalent units of production
Direct
Materials
Conversion
Units to complete beginning WIP
Direct materials (5,000 x 25%) ……….
0 EUP
Conversion (5,000 x 25%) ……………..
1,250 EUP
Units started and completed …………..
6,000 EUP
6,000 EUP
Units of ending work in process
Direct materials (8,000 x 100%) ……..
8,000 EUP
Conversion (8,000 x 40%) ……………..
_________
3,200 EUP
Equivalent units of production ………..
14,000 EUP
10,450 EUP
[Continued on next page]
Comprehensive Problem (Continued)
(Using FIFO)
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period ……………...
$ 52,440
$ 303,375
÷ EUP …………………………………………….
÷ 14,000
÷ 10,450
Cost per EUP (rounded) ………………….
$3.75 per
EUP
$29.03 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process …………………………..
$ 8,135
Cost to complete beginning work in process
Direct materials (0 EUP x $3.75 per EUP)……………….……….
$ 0
Conversion (1,250 EUP x $29.03 per EUP) ……………..……….
36,288
36,288
Costs of units started and completed this period
Direct materials (6,000 EUP x $3.75 per EUP) ………..……….
22,500
Conversion (6,000 EUP x $29.03 per EUP) ……………..……….
174,180
196,680
Total cost of goods finished this period ………………….……….
241,103
Costs of ending work in process
Direct materials (8,000 EUP x $3.75 per EUP) ………..……….
30,000
Conversion (3,200 EUP x $29.03 per EUP) ……………..……….
92,896
122,896
Total costs accounted for ……………………………………….……….
$363,999*
*Equals $363,950 costs to account for with $49 rounding difference
Part 3 — Journal entries (Using FIFO)
g.
Finished Goods Inventory …………………………..
241,103
Work in Process Inventory ……………………..……
241,103
Transferred goods to Finished Goods.
h.
Cash …………………………………………………………..…………
625,000
Sales …………………………..…………………………..
625,000
Sold finished goods for cash.
Cost of Goods Sold …………………………..………..…………
265,700
Finished Goods Inventory …………………………..
265,700
Transferred costs to COGS.
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 16
969
Comprehensive Problem (Continued)
Part 4 (Using FIFO)
General ledger accounts
Raw Materials Inventory
Acct. No. 132
Date
Explanation
Debit
Credit
Balance
June
30
Balance
25,000
(a)
Purchases
125,000
150,000
(b)
Usage
62,440
87,560
Work in Process Inventory
Acct. No. 133
Date
Explanation
Debit
Credit
Balance
June
30
Balance
8,135
(b)
Direct materials
52,440
60,575
(c)
Direct labor
202,250
262,825
(f)
Overhead allocation
101,125
363,950
(g)
Transfer to Fin. Goods
241,103
122,847*
*Agrees with $122,896 from process cost summary with $49 rounding difference
Finished Goods Inventory
Acct. No. 135
Date
Explanation
Debit
Credit
Balance
June
30
Balance
110,000
(g)
Transfer in from prod.
241,103
351,103
(h)
July sales
265,700
85,403
Comprehensive Problem (Continued)
Part 4—(Using FIFO) concluded
Factory Payroll Payable
Acct. No. 212
Date
Explanation
Debit
Credit
Balance
(c)
Direct labor
202,500
202,500
(c)
(d)
Indirect labor
Payment
25,000
227,250
227,250
0
Sales
Acct. No. 413
Date
Explanation
Debit
Credit
Balance
(h)
July sales
625,000
625,000
Cost of Goods Sold
Acct. No. 502
Date
Explanation
Debit
Credit
Balance
(h)
July sales
265,700
265,700
Factory Overhead
Acct. No. 540
Date
Explanation
Debit
Credit
Balance
(b)
Indirect materials
10,000
10,000
(d)
Indirect labor
25,000
35,000
(e)
Other overhead costs
80,000
115,000
(f)
Overhead application
101,125
13,875
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 16
971
Comprehensive Problem (Concluded)
Part 5 (Using FIFO)
Computation of gross profit for July
Sales …………………………………………………………………………………….…
$ 625,000
Cost of goods sold* …………………………..………………………………….…
(279,575)
Gross profit ………………………………………………………………………….…
$ 345,425
* $279,575 = $265,700 + $13,875 (underapplied overhead)
1. These costs are part of getting the products that Apple sells to its
2. These costs would either be expensed as cost of sales or as selling
and administrative expenses. Thus, net income will not be affected.
3. Answers will vary depending on information obtained.
1.
Apple
Google
($ millions)
Current Year
Prior Year
Current Year
Prior Year
Expenses
Cost of goods sold ……
$106,606
$ 87,846
$25,858
$20,634
Operating expenses..…
15,305
13,421
20,001
16,781
Total expenses ……….…
$121,911
$101,267
$45,859
$37,415
COGS .
Total expenses
$106,606
$121,911
= 87.4 %
$ 87,846
$101,267
= 86.7%
$25,858
$45,859
= 56.4%
$20,634
$37,415
= 55.1%
2. Apple had a higher ratio in both the current year and the prior year.
year.