124 Chapter 5
accessible website, in whole or in part.
Direct Labor (Est. $670,000)
Overhead (Est. $402,000)
Date
Source
Cost
Date
Source
Cost
2013 July 31
Summary
of time
sheets for
direct labor
2013 July 31
Journal
entry of
7/31/13
$175,040
$105,024
Summary (as of 7/31/13)
Actual
Budget
Under (Over)
Direct material
$121,800
$1,240,000
Direct labor
175,040
670,000
Overhead
105,024
402,000
Totals
$401,864
$2,312,000
b. Work in Process—Job #515
121,800
Work in Process—other jobs
457,500
Direct Material Inventory
579,300
Work in Process—Job #515
175,040
Work in Process—other jobs
408,960
Manufacturing Overhead
55,800
Salaries and Wages Expense
39,600
Salaries and Wages Payable
679,400
Manufacturing Overhead
26,400
Depreciation Expense
7,800
Accumulated Depr.—Const. Assets
26,400
Accumulated Depr.—Office Assets
7,800
Sales Promotion Expense
11,100
Accounts Payable
11,100
Advertising Expense
6,600
Cash
6,600
Manufacturing Overhead
18,600
Supplies Inventory
18,600
Miscellaneous Expense
10,200
Accounts Payable
10,200
Utilities Expense
1,800
Manufacturing Overhead
5,400
Utilities Payable
7,200
Work in Process—Job #515
105,024
Work in Process—other jobs
245,376
Manufacturing Overhead
350,400
Accounts Receivable
1,224,000
Sales
1,224,000
Finished Goods Inventory
829,000
Work in Process Inventory
829,000
Chapter 5 125
Cost of Goods Sold
829,000
Finished Goods Inventory
829,000
c. Work in Process—beginning
$ 871,800
Production costs:
Direct material
$579,300
Direct labor
584,000
Applied overhead
350,400
1,513,700
$ 2,385,500
Work in process—ending
(1,556,500)
Cost of goods manufactured
$ 829,000
d. Birmingham Contractors
Income Statement
For the Month Ended July 31, 2013
Revenues from completed projects
$1,224,000
Less cost of goods sold
(829,000)
Gross margin on completed jobs
$ 395,000
Non-production expenses:
Salaries and wages expense
$39,600
Depreciation expense
7,800
Utilities expense
1,800
Sales promotion expense
11,100
Advertising expense
6,600
Miscellaneous expense
10,200
(77,100)
Income before income taxes
$ 317,900
Income taxes (40%)
(127,160)
Net income
$ 190,740
43. a. Job #2019:
Design ($81,600 × 30%)
$24,480
Production (720 × $15)
10,800
Installation ($10,080 × 90%)
9,072
Total overhead applied
$44,352
Job #2020:
Design ($69,360 × 30%)
$20,808
Production (2,400 × $15)
36,000
Installation ($11,520 × 90%)
10,368
Total overhead applied
$67,176
Job #2021:
Design ($73,440 × 30%)
$22,032
Production (960 × $15)
14,400
Installation ($15,200 × 90%)
13,680
Total overhead applied
$50,112
126 Chapter 5
accessible website, in whole or in part.
Design
Production
Installation
Actual
$105,600
$ 60,000
$ 31,200
Applied
(67,320)
(61,200)
(33,120)
(Over)/underapplied
$ 38,280
$ (1,200)
$ (1,920)
Actual OH for company
$ 196,800
Applied OH for company
(161,640)
Total company underapplied OH
$ 35,160
b. Work in Process (Design)—Job #2019
9,600
Work in Process (Design)—Job #2020
8,200
Work in Process (Design)—Job #2021
17,600
Raw Material Inventory
35,400
Work in Process (Design)—Job #2019
81,600
Work in Process (Design)—Job #2020
69,360
Work in Process (Design)—Job #2021
73,440
Wages Payable
224,400
Work in Process (Design)—Job #2019
24,480
Work in Process (Design)—Job #2020
20,808
Work in Process (Design)—Job #2021
22,032
Manufacturing Overhead
67,320
Work in Process (Prod.)—Job #2019
116,400
Work in Process (Prod.)—Job #2020
268,800
Work in Process (Prod.)—Job #2021
232,000
Raw Material Inventory
617,200
Work in Process (Prod.)—Job #2019
34,000
Work in Process (Prod.)—Job #2020
59,600
Work in Process (Prod.)—Job #2021
21,600
Wages Payable
115,200
Work in Process (Prod.)—Job #2019
10,800
Work in Process (Prod.)—Job #2020
36,000
Work in Process (Prod.)—Job #2021
14,400
Manufacturing Overhead
61,200
Work in Process (Inst.)—Job #2019
10,400
Work in Process (Inst.)—Job #2020
36,800
Work in Process (Inst.)—Job #2021
10,400
Raw Material Inventory
57,600
Work in Process (Inst.)—Job #2019
10,080
Work in Process (Inst.)—Job #2020
11,520
Work in Process (Inst.)—Job #2021
15,200
Wages Payable
36,800
Work in Process (Inst.)—Job #2019
9,072
Work in Process (Inst.)—Job #2020
10,368
Work in Process (Inst.)—Job #2021
13,680
Manufacturing Overhead
33,120
Chapter 5 127
c. Job #2019:
Direct material
$136,400
Direct labor
125,680
Overhead
44,352
Total cost
$306,432
Job #2020:
Direct material
$313,800
Direct labor
140,480
Overhead
67,176
Total cost
$521,456
Job #2021:
Direct material
$260,000
Direct labor
110,240
Overhead
50,112
Total cost
$420,352
44. a. Reliant: $5,580 ÷ $45 = 124 DLHs worked
Dumas: $18,000 ÷ $45 = 400 DLHs worked
Reliant
Dumas
Omaha
Direct material
$ 7,800
$14,200
$19,800
Direct labor
5,580
18,000
28,350
Overhead
7,192
23,200
36,540
Total cost
$20,572
$55,400
$84,690
b. Reliant: $20,572 ÷ 3 = $6,857 per ad
c. Sales (21 ads × $8,600)
$ 180,600
Costs:
Direct material
$ 41,800
Direct labor
51,930
Applied overhead
66,932
Overapplied overhead
(16,932)
(143,730)
Net income
$ 36,870
d. Sales: Reliant ($20,572 × 1.3)
$ 26,743.60
Dumas ($55,400 × 1.3)
72,020.00
Omaha ($84,690 × 1.3)
110,097.00
$ 208,860.60
Costs:
Direct material
$ 41,800.00
Direct labor
51,930.00
Applied overhead
66,932.00
Overapplied overhead
(16,932.00)
(143,730.00)
Net income
$ 65,130.60
128 Chapter 5
Income using a cost-plus basis is substantially higher than that which is ob-
tained using a flat rate selling price. Dumas Manufacturing will be more
Ads shouldn’t be billed at a flat rate because some may take much longer to de-
velop than others. The eight ads for Omaha took 630 hours to develop, or about
process begins.
45. a
Oct. 1
Raw Material Inventory
1,150,000
Accounts Payable
1,150,000
1
Work in Process—P
650,000
Manufacturing Overhead—P
500,000
Raw Material Inventory
1,150,000
5
Manufacturing Overhead—C
25,000
Accounts Payable
25,000
8
Manufacturing Overhead—P
5,000
Cash
5,000
15
No entry needed.
20
Manufacturing Overhead—C
60,000
Cash
60,000
24
Raw Material Inventory
1,485,000
Accounts Payable
1,485,000
31
Manufacturing Overhead—P
36,320
Work in Process—P
45,000
Cash
66,120
Accumulated Depr.—P
15,200
31
Manufacturing Overhead—C
18,650
Work in Process—C
16,300
Cash
26,200
Accumulated Depr.—C
8,750
31
Accounts Payable
2,635,000
Cash
2,635,000
31
Work in Process—P
150,000
Manufacturing Overhead—P
(6,000 MHs × $25)
150,000
Chapter 5 129
Oct. 31
Work in Process—C
26,895
Manufacturing Overhead—C
($16,300 × 1.65)
26,895
Nov. 1
Manufacturing Overhead—C
5,000
Cash
5,000
4
Work in Process—P
825,000
Manufacturing Overhead—P
175,000
Raw Material Inventory
1,000,000
8
Manufacturing Overhead—P
5,000
Cash
5,000
15
Work in Process—C
200,000
Manufacturing Overhead—C
225,000
Raw Material Inventory
425,000
18
No entry needed.
24
No entry needed.
29
No entry needed.
30
Manufacturing Overhead—P
54,050
Work in Process—P
115,000
Cash
153,850
Accumulated Depr.—P
15,200
30
Manufacturing Overhead—C
43,850
Work in Process—C
134,300
Cash
159,800
Accumulated Depr.—C
18,350
30
Work in Process—P
98,750
Manufacturing Overhead—P
(3,950 × $25)
98,750
30
Work in Process—C
221,595
Manufacturing Overhead—C
($134,300 × 1.65)
221,595
Nov. 30
Completed Projects Inventory
2,482,840
Work in Process—P
1,883,750
Work in Process—C
599,090
30
Accounts Receivable
3,450,000
Construction Revenue
3,450,000
30
Cost of Contracts Sold
2,482,840
Completed Projects Inventory
2,482,840