Problem 2-21B (30 minutes)
1. The predetermined overhead rate was:
Estimated fixed manufacturing overhead ………………
$1,278,000
Estimated variable manufacturing overhead
$3.40 per computer hour × 82,000 hours……………
278,800
Estimated total manufacturing overhead cost …………
$1,556,800
÷ Estimated total computer hours ……………..
hours
= Predetermined overhead rate ………………..
per hour
Actual manufacturing overhead cost …………………..
Underapplied overhead cost ……………………………..
Cost of Goods Sold ……………………………….
Finished goods inventory, beginning* ………….
$ 37,000
Add: Cost of goods manufactured ……………….
688,000
Cost of goods available for sale* ………………..
725,000
Deduct: Finished goods inventory, ending …….
Unadjusted cost of goods sold* ………………….
663,000
Add: Underapplied overhead ……………………..
Problem 2-22B (30 minutes)
Alexsandar Company
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning* ……….
$ 59,000
Add: Purchases of raw materials*……………
263,000
Total raw materials available ………………….
322,000
Deduct: Raw materials inventory, ending* ..
30,000
Raw materials used in production ……………
$292,000
Direct labor ……………………………………………
57,000
Manufacturing overhead applied to work in
process inventory* ………………………………..
336,000
Total manufacturing costs* ……………………….
685,000
Add: Beginning work in process inventory …….
32,000
717,000
Deduct: Ending work in process inventory* …..
29,000
Cost of goods manufactured………………………
$688,000
Problem 2-22B (continued)
Alexsandar Company
Income Statement
Sales ………………………………………………….
$1,093,000
Cost of goods sold ($663,000 + $23,000) ….
686,000
Gross margin ……………………………………….
407,000
Selling and administrative expenses:
Selling expenses* ……………………………….
$217,000
Administrative expense* ………………………
151,000
368,000
Net operating income* …………………………..
$ 39,000
* Given
2-4 Introduction to Managerial Accounting, 6th edition
Problem 2-23B (45 minutes)
1. The cost of raw materials put into production was:
Raw materials inventory, 1/1 …………………..
$ 38,000
Debits (purchases of materials) ……………….
450,000
Materials available for use ………………………
488,000
Raw materials inventory, 12/31 ……………….
55,000
Materials requisitioned for production ……….
$433,000
2. Of the $433,000 in materials requisitioned for production, $328,000 was
3.
Total factory wages accrued during the year
(credits to the Factory Wages Payable account) ..
$181,000
Less direct labor cost (from Work in Process) ……..
119,000
Indirect labor cost ………………………………………..
$ 62,000
4. The cost of goods manufactured for the year was $780,000—the credits
5. The Cost of Goods Sold for the year was:
Finished goods inventory, 1/1 ……………………………………
$ 47,000
Add: Cost of goods manufactured (from Work in Process) .
780,000
Cost of goods available for sale ………………………………….
827,000
Deduct: Finished goods inventory, 12/31 ……………………..
138,000
Cost of goods sold …………………………………………………..
$689,000
6. The predetermined overhead rate was:
Predetermined
overhead rate
=
Manufacturing overhead cost applied
Direct materials cost
Predetermined
overhead rate
=
$420,000
=
128.05% of direct materials cost
$328,000
2-6 Introduction to Managerial Accounting, 6th edition
Problem 2-23B (continued)
7. Manufacturing overhead was overapplied by $32,000, computed as
follows:
Actual manufacturing overhead cost for the year (debits) .
$388,000
Applied manufacturing overhead cost (from Work in
Process—this would be the credits to the Manufacturing
Overhead account) ………………………………………………
420,000
Overapplied overhead …………………………..…………………
$(32,000)
8. The ending balance in Work in Process is $166,000. Direct labor makes
up $92,567.90 of this balance, and manufacturing overhead makes up
Balance, Work in Process, 12/31 …………………………...
$166,000.00
Less: Direct materials cost (given) ………………………….
(32,200.00)
Manufacturing overhead cost
($32,200 × 128.05%) ……………………………….
(41,232.10)
Direct labor cost (remainder) ………………………………..
$92,567.90
Problem 2-24B (60 minutes)
1. a.
Predetermined
overhead rate
=
Estimated total manufacturing overhead cost
Estimated total amount of the allocation base
Predetermined
overhead rate
=
$117,000
=
130% of direct labor cost
$90,000
b.
Actual manufacturing overhead costs:
Insurance, factory ………………………………
$ 8,800
Depreciation of equipment……………………
17,000
Indirect labor …………………………………….
32,700
Property taxes …………………………………..
8,500
Maintenance ……………………………………..
13,000
Rent, building ……………………………………
36,000
Total actual costs …………………………………
116,000
Applied manufacturing overhead costs:
$86,000 × 130% ……………………………….
111,800
Underapplied overhead ………………………….
$ 4,200
2.
Ilarion Manufacturing Company
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning ……………..
$ 29,000
Add: Purchases of raw materials …………………
130,000
Total raw materials available ……………………..
159,000
Deduct: Raw materials inventory, ending ……..
11,000
Raw materials used in production ……………….
$148,000
Direct labor ………………………………………………
86,000
Manufacturing overhead applied to work in
process …………………………………………………
111,800
Total manufacturing cost …………………………….
345,800
Add: Work in process, beginning …………………..
45,000
390,800
Deduct: Work in process, ending …………………..
36,000
Cost of goods manufactured ………………………..
$354,800
Direct materials …………………………………..
Direct labor ………………………………………..
Manufacturing overhead ……………………….
Work in process inventory ……………………..
Problem 2-24B (continued)
3.
Unadjusted cost of goods sold:
Finished goods inventory, beginning ………………..
$ 71,000
Add: Cost of goods manufactured ……………………
354,800
Cost of goods available for sale ………………………
425,800
Deduct: Finished goods inventory, ending …………
61,000
Unadjusted cost of goods sold ………………………..
$364,800
4.
Direct materials ……………………………………………..
$ 3,300
Direct labor …………………………………………………..
4,900
Overhead applied (130% × $4,900) …………………..
6,370
Total manufacturing cost …………………………………
$14,570
$14,570 × 140% = $20,398 price to customer.
5. The amount of overhead cost in Work in Process was:
$8,700 direct labor cost × 130% = $11,310
The amount of direct materials cost in Work in Process was:
Total ending work in process ………………….
$36,000
Deduct:
Direct labor ……………………………………..
$ 8,700
Manufacturing overhead ……………………..
11,310
20,010
Direct materials …………………………………..
$15,990
Problem 2-25B (120 minutes)
1.
a.
Raw Materials ………………………………..
145,000
Accounts Payable ………………………
145,000
b.
Work in Process ……………………………..
141,000
Raw Materials …………………………...
141,000
c.
Manufacturing Overhead ………………….
24,000
Accounts Payable ………………………
24,000
d.
Work in Process ……………………………..
223,000
Manufacturing Overhead ………………….
61,700
Salaries Expense …………………………….
143,000
Salaries and Wages Payable …………
427,700
e.
Manufacturing Overhead ………………….
17,000
Accounts Payable ………………………
17,000
f.
Advertising Expense ………………………..
128,000
Accounts Payable ………………………
128,000
g.
Manufacturing Overhead ………………….
30,100
Depreciation Expense………………………
12,900
Accumulated Depreciation ……………
43,000
h.
Manufacturing Overhead ………………….
68,000
Rent Expense …………………………..……
17,000
Accounts Payable ………………………
85,000
i.
Miscellaneous Expense …………………….
11,000
Accounts Payable ………………………
11,000
j.
Work in Process ……………………………..
197,400
Manufacturing Overhead ……………..
197,400
Predetermined
overhead rate
=
Estimated total manufacturing overhead cost
Estimated direct materials cost
Predetermined
overhead rate
=
$221,200
=
140% of direct materials cost
$158,000
$141,000 direct materials cost × 140% = $197,400 applied.
(g)
43,000
(g)
(d)
(d)
143,000
Problem 2-25B (continued)
k.
Finished Goods ……………………………..
555,000
Work in Process ………………………..
555,000
l.
Accounts Receivable ……………………….
1,100,000
Sales ………………………………………
1,100,000
Cost of Goods Sold …………………………
530,000
Finished Goods …………………………
530,000
2.
Accounts Receivable
Raw Materials
(l)
1,100,000
Bal.
23,000
(b)
141,000
(a)
145,000
Bal.
27,000
Work in Process
Finished Goods
Bal.
24,000
(k)
555,000
Bal.
34,000
(l)
530,000
(b)
141,000
(k)
555,000
(d)
223,000
(j)
197,400
Bal.
30,400
Bal.
59,000
Manufacturing Overhead
Accounts Payable
(c)
24,000
(j)
197,400
(a)
145,000
(d)
61,700
(c)
24,000
(e)
17,000
(e)
17,000
(g)
30,100
(f)
128,000
(h)
68,000
(h)
85,000
Bal.
3,400
(i)
11,000
(i)
11,000
(f)
128,000