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B. Ex. 17.4 a. Manufacturing Overhead …………………………
…
10,000
Cost of Goods Sold …………………………… 10,000
b. Overhead was overapplied during the period by $10,000:
B. Ex. 17.5 a.
b.
To reduce Cost of Goods Sold by the amount of
manufacturing overhead overapplied during the
period.
*5,000 direct labor hours × $50 per direct labor hour = $250,000 applied
Job order costing is appropriate because costs can be traced to individual customer
orders.
Job order costing is appropriate because most costs can be traced directly to
particular clients.
B. Ex. 17.6 a. Work in Process Inventory ………………….. 7,200
Direct Labor ………………………… 7,200
To apply actual direct labor costs to
production ($18 per DLH × 400 DLH =
$7,200).
B. Ex. 17-8 c. (1) Manufacturing Overhead …………………………
…
XXX
(continued) Cash (or Accounts Payable) ……………. XXX
B. Ex. 17.9
To record factory overhead cost (such as payroll
for indirect labor) incurred.
Suggested activity bases for allocating the company’s activity-cost pools are listed
below:
Production set-up costs: The number of set-ups required (or, perhaps, number of
production runs).
B. Ex. 17.10 a. Machine Percent
Hours of Total
Utilities Cost
A
llocated
b. Work Percent
Orders of Total
Maintenance
Cost Allocated
Deluxe: $240,000 × 25% ……… 60,000$
Basic: $240,000 × 75%............ 180,000
Total cost allocated…….. 240,000$
Setup Costs
A
llocated
SOLUTIONS TO EXERCISES
Ex. 17.1 a.
b.
Cost driver
Cost of finished goods manufactured
Ex. 17.4 a.
b.
c.
$194,000 [($45,000 × 120%) + (400 machine hours × $350 per machine hour)]
$24 [($45,000 + $121,000 + $194,000) ÷ 15,000 units]
The purpose in using more than one application rate is to more precisely apply
overhead costs to the units generating those costs. In the manufacture of keyboards,
Ex. 17.6 a. Sales …………………………………………………………… 900,000$
Cost of Goods Sold …………………………………………… 610,000 *
Gross Profit …………………………………………………… 290,000$
Selling & Administrative ……………………………………… 130,000
Beginning Finished Goods Inventory ……………………….. $ 0
(4) Work in Process Inventory …………………… 250,000
Manufacturing Overhead ………………….. 250,000
(7) Accounts Receivable ………………………….. 1,000,000
Sales ……………………………………………. 1,000,000
(8) Manufacturing Overhead ………………………. 5,000
Cost of Goods Sold ……………………………. 5,000
Closed overapplied manufacturing overhead
($250,000 applied - $245,000 actual).
Applied overhead to jobs at a rate of $10 per
direct labor hour ($500,000 direct labor ÷ $20
hourly rate × $10 per hour).
Ex. 17.7 Beginning Finished Goods Inventory …………………………. $ 0
(continued) Costs transferred from work in process ………………………. 745,000
Costs applied to jobs sold …………………………………….. (615,000)
Finished Goods Inventory, June 30 …………………………… 130,000$
Ex. 17.8 a. 12/2 Materials Inventory ………………………
…
400,000
12/9 Work in Process Inventory ………………
…
150,000
Materials Inventory …………………… 150,000
Used direct materials on job no. 101.
12/15 Work in Process Inventory ………………
…
30,000
Materials Inventory ……………………. 30,000
12/28 Work in Process Inventory ………………
…
75,000
Manufacturing Overhead ………………… 75,000
12/29 Finished Goods Inventory ………………
…
330,000
Work in Process Inventory …………….. 330,000
Applied direct labor to jobs: job no. 100,
$9,000; job no. 101, $11,000; job no. 102,
$5,000.
Applied overhead to jobs: job no. 100,
$27,000; job no. 101, $33,000; job no. 102,
$15,000.
Sold job no. 100 on account.
Cost of Goods Sold ………...………… 136,000
Finished Goods Inventory …………. 136,000
Record cost of job no. 100.
12/31 Manufacturing Overhead ……...……… 78,000
b. Cost of Goods Sold (unadjusted) …………………………. 136,000$
Underapplied overhead ……………………………………… 3,000
Cost of Goods Sold, December 31 ……………………….. 139,000$
Direct materials used on jobs 100, 101, & 102 ………….. 280,000
Direct labor charged to jobs 100, 101, & 102 ……………. 25,000
Overhead applied to jobs 100, 101, & 102 ……………….. 75,000
Cost of jobs 100 & 101 transferred ……………………….. (330,000)
Work in Process Inventory, December 31 ………………… 50,000$
Beginning Finished Goods Inventory ……………………… $ 0
Cost of completed jobs 100 & 101 ………………………… 330,000
Cost of job no. 100 sold …………………………………….. (136,000)
Finished Goods Inventory, December 31 …………………. 194,000$
Closed underapplied manufacturing
overhead ($78,000 actual - $75,000
applied).
