Ex. 17.8
(continued
)
d.
Ex. 17.9 a. 1/5 Materials Inventory ………………………
…
800,000
1/14 Work in Process Inventory ………………
…
200,000
Materials Inventory ……………………. 200,000
Used direct materials on job no. 1002.
1/18 Work in Process Inventory ………………
…
100,000
Materials Inventory ……………………. 100,000
…
1/27 Work in Process Inventory ………………
…
258,750
Manufacturing Overhead ………….…… 258,750
1/28 Finished Goods Inventory ……………………
…
884,000
Work in Process Inventory ……………… 884,000
Applied direct labor to jobs: job no. 1001,
$3,600; job no. 1002, $5,400; job no. 1003,
$1,350.
Applied overhead to jobs: job no. 1001,
$90,000; job no. 1002, $135,000; job no.
1003, $33,750.
Manufacturing overhead applied to jobs totaled $75,000. Actual
manufacturing overhead costs totaled $78,000. Thus, overhead was
underapplied by $3,000. This amount was closed to Cost of Goods Sold on
December 31 (see part a).
…
Sales ………………………………………… 725,000
Sold job no. 1001 on account.
Cost of Goods Sold ……………………………
…
543,600
Finished Goods Inventory …………………. 543,600
Record cost of job no. 1001.
Cost of Goods Sold ..……………………… 8,750
b. Cost of Goods Sold (unadjusted) ……………………………………….. 543,600$
Overapplied overhead …………………………………………………… (8,750)
.
Beginning Work in Process Inventory …………………………………
…
$ 0
Direct materials for jobs 1001, 1002, & 1003 ………………………….. 750,000
Direct labor for jobs 1001, 1002, & 1003 ……………………………….
.
10,350
Overhead applied to jobs 1001, 1002, & 1003 …………………………. 258,750
Cost of jobs 1001 & 1002 transferred …………………………………
…
(884,000)
Work in Process Inventory, January 31 ………………………………
…
135,100$
Beginning Finished Goods Inventory …………………………………
…
$ 0
Cost of completed jobs 1001 & 1002 …………………………………… 884,000
Cost of job no. 1001 sold ………………………………………………… (543,600)
Finished Goods Inventory, January 31 …………………………………
.
340,400$
Closed overapplied manufacturing overhead
($258,750 applied – $250,000 actual).
d. Manufacturing overhead applied to jobs totaled $258,750. Actual
Ex. 17.10 a. Materials Inventory …….………………………………. 125,000
Accounts Payable ………………………………. 125,000
b. Work in Process Inventory ………..……………………. 100,000
Materials Inventory ………………………………. 100,000
Cash ………………………………………………. 150,000
To record actual overhead costs incurred.
e. Work in Process Inventory ………..…………………… 140,000
Manufacturing Overhead ………………………… 140,000
To apply overhead to jobs in December.
f. Accounts Receivable …………..………………………… 600,000
Sales ………………………………………………. 600,000
To record December sales on account.
Cost of Goods Sold ………..……………………………
…
325,000
Finished Goods Inventory ………………………. 325,000
To record the purchase of direct materials on account.
(continued) Manufacturing Overhead ……………………… 10,000
i. Sales ………………………………………………………………………. 600,000$
Cost of Goods Sold ($325,000 + $10,000) ……………………………. 335,000
Ex. 17.11 a. Actual manufacturing overhead ………………………………………… 200,000$
Debit balance in Manufacturing Overhead account ………………… (40,000)
Manufacturing overhead applied ………………………………………
…
160,000$
b. $160,000 overhead applied ÷ 5,000 DLH ………………………………. $32 per DLH
c. $176,000 budgeted overhead ÷ $32 application rate ………………… 5,500 DLH
Direct labor rate …………………………………………………………
…
$22 per hour
e. Beginning Work in Process Inventory …………………………………. 50,000$
Total manufacturing costs charged to production ……………………. 590,000
Ending Work in Process Inventory …………………………………….. (40,000)
Costs transferred to finished goods ……………………………………. 600,000$
Cost of Goods Sold ($580,000 + $40,000) ……………………………… 620,000
Gross Profit ………………………………………………………………. 900,000$
Selling and Administrative Expenses ………………………………….. 700,000
Net Income ……………………………………………………………….. 200,000$
To close underapplied manufacturing overhead
($150,000 actual – $140,000 applied).
Ex. 17.12 a. Beginning Materials Inventory ……………………………………
…
16,000$
Direct labor incurred ………………………………………………… 190,000
Manufacturing overhead applied …………………………………… 285,000 2
Costs transferred to finished goods …………………………………. (420,000) 3
Work in Process Inventory lost in the fire ………………………….
.
193,000$
c. Beginning Finished Goods Inventory ……………………………….
.
30,000$
Ex. 17.13 a. Work in Process Inventory:
Job no. 1000 …………………………………………………………
…
12,400$
Job no. 1001 …………………………………………………………
…
15,000
Work in Process Inventory, February 28 …………………………
…
27,400$
…
Ex. 17.14 a.
Power-cost pool: Machine hours
Inspection-cost pool: Number of inspection hours
The most likely cost drivers for each cost pool are:
Thus, the amount of total manufacturing overhead cost assigned to each pool is
computed as follows:
…
Machine hours used for hand-made costumes……….
.
4,000 4%
Total machine hours ………………………………….. 100,000 100%
Step 2:
Costs allocated to machine-made costumes ($32,000 × 96%) ………. 30,720$
% of total
Ins
p
ection hours for machine-made costumes ………
.
2,000 80%
Inspection hours for hand-made costumes …………. 500 20%
Total inspection hours ………………………………
…
2,500 100%
Step 2:
Allocate $32,000 in power-cost pool to each product line based on the
percentages computed in step 1.
Allocate $48,000 in inspection-cost pool to each product line based on the
Ex. 17.14
(continued) c. Machine-
Made
Costumes Hand-Made
Costumes
$ 240,000 $ 160,000
Less: 120,000 96,000
$ 1.06 $ 3.32
Ex. 17.15 a. Direct materials ……………………………………………………
…
$ 14,000
Direct labor …………………………………………………………
…
15,000
Maintenance ($40,000 × 60/600 machine hours) …………………
…
4,000
Materials handling ($20,000 × 20/400 moves) ……………………
…
1,000
…
…
b. Bid price: $34,700 × 175% = $60,725
Profitability per unit ………………………………
Direct labor and materials
Sales
SOLUTIONS TO PROBLEMS SET
A
20 Minutes, Easy PROBLEM 17.1
A
JENSEN FENCES
a.
Manufacturing overhead charged to jobs in process,
June 30:
Direct labor charged to jobs in process, June 30 1,500$
Overhead application rate 125%
(1) Work in Process Inventor
y
45,000
Materials Inventor
y
18,000
(2) Finished Goods Inventor
y
44,000
y
(3) Cash 50,000
Sales 50,000
General Journal