4-11
1.
Quarter
1
2
3
4
Annual
(1) Pools sold
700
500
150
150
1,500
(2) Direct manufacturing
labor hours (0.5 Row 1)
350
250
75
75
750
(3) Fixed manufacturing
overhead costs
$10,500
$10,500
$10,500
$10,500
$42,000
(4) Budgeted fixed
manufacturing overhead
rate per direct
manufacturing labor hour
($10,500 Row 2)
$30
$42
$140
$140
$56
Budgeted Costs Based on
Quarterly Manufacturing
Overhead Rate
2nd Quarter
3rd Quarter
Direct material costs ($7.50 500 pools; 150 pools)
$ 3,750
$ 1,125
Direct manufacturing labor costs
($16 250 hours; 75 hours)
4,000
1,200
Variable manufacturing overhead costs
($12 250 hours; 75 hours)
3,000
900
Fixed manufacturing overhead costs
($42 250 hours; $140 × 75 hours)
10,500
10,500
Total manufacturing costs
$21,250
$13,725
Divided by pools manufactured each quarter
÷ 500
÷ 150
Manufacturing cost per pool
$ 42.50
$ 91.50
2.
Budgeted Costs Based on
Annual Manufacturing
Overhead Rate
2nd Quarter
3rd Quarter
Direct material costs ($7.50 500 pools; 150 pools)
$ 3,750
$1,125
Direct manufacturing labor costs
($16 250 hours; 75 hours)
4,000
1,200
Variable manufacturing overhead costs
($12 250 hours; 75 hours)
3,000
900
Fixed manufacturing overhead costs
($56 250 hours; 75 hours)
14,000
4,200
Total manufacturing costs
$24,750
$7,425
Divided by pools manufactured each quarter
500
150
Manufacturing cost per pool
$ 49.50
$49.50
4-12
3.
2nd Quarter
3rd Quarter
Prices based on quarterly budgeted manufacturing
overhead rates calculated in requirement 1
($42.50 130%; $91.50 130%)
$55.25
$118.95
Price based on annual budgeted manufacturing overhead
rates calculated in requirement 2
($49.50 130%; $49.50 130%)
$64.35
$64.35
Splash should use the budgeted annual manufacturing overhead rate because capacity decisions
4-13
4-23 (10–15 min.) Accounting for manufacturing overhead.
1. Budgeted manufacturing overhead rate =
$7,500,000
250,000 machine–hours
2. Work-in–Process Control 7,350,000
3. $7,350,000– $7,300,000 = $50,000 overallocated,
an insignificant amount of actual manufacturing overhead
4-14
4-24 (35−45 min.) Job costing, journal entries.
1. An overview of the product costing system is:
COST
DIRECT
COST
Manufacturing Overhead
Direct
Materials
INDIRECT
COST
POOL
Direct
Manuf
.
Labor
Direct Costs
4-15
2. & 3.
2.
(1) Materials Control
Accounts Payable Control
800
800
(2) Work-in-Process Control
Materials Control
710
710
(3) Manufacturing Overhead Control
Materials Control
100
100
(4) Work-in-Process Control
Manufacturing Overhead Control
Wages Payable Control
1,300
900
2,200
(5) Manufacturing Overhead Control
Accumulated Depreciation––buildings and
manufacturing equipment
400
400
(6) Manufacturing Overhead Control
Miscellaneous accounts
550
550
(7) Work-in-Process Control
Manufacturing Overhead Allocated
(1.60 $1,300 = $2,080)
2,080
2,080
(8) Finished Goods Control
Work-in-Process Control
4,120
4,120
(9) Accounts Receivable Control (or Cash)
Revenues
8,000
8,000
(10) Cost of Goods Sold
Finished Goods Control
4,020
4,020
(11) Manufacturing Overhead Allocated
Manufacturing Overhead Control
Cost of Goods Sold
2,080
1,950
130
3.
Materials Control
Bal. 1/1/2011
(1) Accounts Payable
Control (Purchases)
100
800
(2) Work-in-Process Control
(Materials used)
(3) Manufacturing Overhead
Control (Materials used)
710
100
Bal. 12/31/2011
90
Work-in-Process Control
Bal. 1/1/2011
(2) Materials Control
(Direct materials)
(4) Wages Payable
Control (Direct
manuf. labor)
(7) Manuf. Overhead
Allocated
60
710
1,300
2,080
(8) Finished Goods Control
(Goods completed)
4,120
Bal. 12/31/2011
30
Finished Goods Control
Bal. 1/1/2011
(8) WIP Control
(Goods completed)
500
4,120
(10) Cost of Goods Sold
4,020
Bal. 12/31/2011
600
Cost of Goods Sold
(10) Finished Goods
Control (Goods sold)
4,020
(11) Manufacturing Overhead
Allocated (Adjust for
overallocation)
130
Bal. 12/31/2011
3,890
Manufacturing Overhead Control
(3) Materials Control
(Indirect materials)
(4) Wages Payable Control
(Indirect manuf. labor)
(5) Accum. Deprn. Control
(Depreciation)
(6) Accounts Payable Control
(Miscellaneous)
100
900
400
550
(11) To close
1,950
Bal.
0
Manufacturing Overhead Allocated
(11) To close
2,080
(7) Work-in-Process Control
(Manuf. overhead allocated)
2,080
Bal.
0
4-17
1. i. Direct Materials Control 124,000
Accounts Payable Control 124,000
Source Document: Purchase Invoice, Receiving Report
Subsidiary Ledger: Direct Materials Record, Accounts Payable
ii. Work in Process Control a 122,000
Salaries Payable Control 20,000
Accounts Payable Control 9,500
Accumulated Depreciation Control 30,000
Rent Payable Control 70,000
Source Document: Depreciation Schedule, Rent Schedule, Maintenance wages due, Invoices
Subsidiary Ledger: Work-in-Process Inventory Records by Jobs, Finished Goods Inventory
Records by Jobs
vii. Cost of Goods Sold c 432,000
Finished Goods Control 432,000
Source Document: Sales Invoice, Completed Job Cost Record
4-18
viii. Manufacturing Overhead Allocated 200,000
Manufacturing Overhead Control
($129,500 + $54,500) 184,000
Cost of Goods Sold 16,000
Source Document: Prior Journal Entries
2. T-accounts
Direct Materials Control
Bal. 1/1/2011
(1) Accounts Payable Control
(Purchases)
9,000
124,000
(2) Work-in-Process Control
(Materials used)
122,000
Bal. 12/31/2011
11,000
Work-in–Process Control
Bal. 1/1/2011
(2) Materials Control
(Direct materials used)
(3) Wages Payable Control
(Direct manuf. labor)
(5) Manuf. Overhead
Allocated
6,000
122,000
80,000
200,000
(6) Finished Goods Control
(Cost of goods
manufactured)
387,000
Bal. 12/31/2011
21,000
Finished Goods Control
Bal. 1/1/2011
(6) WIP Control
(Cost of goods manuf.)
69,000
387,000
(7) Cost of Goods Sold
432,000
Bal. 12/31/2011
24,000
Cost of Goods Sold
(7) Finished Goods Control
(Goods sold)
432,000
(8) Manufacturing Overhead
Allocated (Adjust for
overallocation)
16,000
Manufacturing Overhead Control
(3) Wages Payable Control
(Indirect manuf. labor)
(4) Salaries Payable Control
(Maintenance)
(4) Accounts Payable Control
(Miscellaneous)
(4) Accum. Deprn. Control
(Depreciation)
(4) Rent Payable Control
(Rent)
54,500
20,000
9,500
30,000
70,000
(8) To close
184,000
Bal.
0
Manufacturing Overhead Allocated
(8) To close
200,000
(5) Work-in–Process Control
(Manuf. overhead
allocated)
200,000
4-26 (45 min.) Job costing, journal entries.
1. An overview of the product-costing system is
(1) Materials Control
Accounts Payable Control
150
150
(2) Work-in–Process Control
Materials Control
145
145
(3) Manufacturing Department Overhead Control
Materials Control
10
10
(4) Work-in–Process Control
Wages Payable Control
90
90
(5) Manufacturing Department Overhead Control
Wages Payable Control
30
30
(6) Manufacturing Department Overhead Control
Accumulated Depreciation
19
19
(7) Manufacturing Department Overhead Control
Various liabilities
9
9
(8) Work-in–Process Control
Manufacturing Overhead Allocated
63
63
(9) Finished Goods Control
Work-in–Process Control
294
294
(10a) Cost of Goods Sold
Finished Goods Control
292
292
(10b) Accounts Receivable Control (or Cash )
400
Manufacturing
Overhead
Machine-Hours
Indirect Costs
Direct Costs
Direct
Materials Direct
Manuf. Labor
INDIRECT
COST
POOL
COST
ALLOCATION
BASE
COST OBJECT
PRODUCT
DIRECT
COSTS
Revenues
400