SOLUTIONS TO EXERCISES
EXERCISE 2-1
(a) Factory Labor …………………………………………………. 80,000
(b) Work in Process Inventory ($80,000 X 85%) ……… 68,000
EXERCISE 2-2
(a) May 31 Work in Process Inventory ……………….. 10,400
31 Work in Process Inventory ……………….. 12,500
31 Work in Process Inventory
31 Finished Goods Inventory ………………… 7,540
*$1,900 X 60%
(b)
Work in Process Inventory
May 1 Balance 3,500
31 10,400
31 12,500
31 7,500
May 31 7,540
May 31 Balance 26,360
EXERCISE 2-2 (Continued)
Job Cost Sheets
Job
No.
Beginning Work
in Process
Direct
Material
Direct
Labor
Manufacturing*
Overhead
Total
430
431
$1,500
0
$1,500
$3,500
4,400
$7,900
$ 3,000
7,600
$10,600
$1,800
4,560
$6,360
$ 9,800
16,560
$26,360
*Direct labor X .60
EXERCISE 2-3
(b) Jan. 31 Work in Process Inventory ………………….. 8,000
Raw Materials Inventory ………………. 8,000
EXERCISE 2-4
(a) + $50,000 + $42,500 = $145,650
(a) = $53,150
EXERCISE 2-4 (Continued)
[Note: The instructions indicate that manufacturing overhead is applied on the
basis of direct labor cost, and the rate is the same in all cases. From Case A,
a student should note the overhead rate to be 85%, or ($42,500 ÷ $50,000).]
(d) = .85 X $140,000
(d) = $119,000
$357,500 – $11,800 = (g)
(g) = $345,700
[Note: (h) and (i) are solved together.]
(i) = .85(h)
(j) = $213,000 + $18,000
(j) = $231,000
EXERCISE 2-5
(a) $2.60 per machine hour ($325,000 ÷ 125,000).
(b) ($342,000) – ($2.60 x 130,000 Machine Hours)
(c) Cost of Goods Sold …………………………………………… 4,000
EXERCISE 2-6
(a) (1) The source documents are:
Direct materials—Materials requisition slips.
(3) The total cost is:
Direct materials …………………………………………………… $4,700
(b) July 31 Finished Goods Inventory ………………………. 7,760
Work in Process Inventory ………………. 7,760
EXERCISE 2-7
1. Raw Materials Inventory ………………………………………… 46,300
3. Factory Labor ……………………………………………………….. 55,900
4. Work in Process Inventory …………………………………….. 50,000
EXERCISE 2-7 (Continued)
5. Manufacturing Overhead ………………………………… 80,500
6. Depreciation Expense ……………………………………. 8,100
7. Work in Process Inventory ($50,000 X 150%) …… 75,000
8. Finished Goods Inventory ………………………………. 88,000
9. Accounts Receivable ……………………………………… 103,000
Cost of Goods Sold ……………………………………….. 75,000
EXERCISE 2-8
1. Raw Materials Inventory …………………………………. 192,000
Factory Labor ………………………………………………… 87,300
2. Work in Process Inventory ……………………………… 153,530
Work in Process Inventory ……………………………… 80,000
3. Manufacturing Overhead ………………………………… 49,500
EXERCISE 2-8 (Continued)
4. Manufacturing Overhead …………………………..……. 14,550
5. Depreciation Expense ……………………………………. 14,300
6. Work in Process Inventory ……………………………… 72,000
7. Finished Goods Inventory ………………………………. 240,930
Computation of cost of jobs finished:
Job
Direct
Materials
Direct
Labor
Manufacturing
Overhead
Total
A20
A21
A23
$35,240
42,920
39,270
$18,000
22,000
25,000
$16,200
19,800
22,500
$ 69,440
84,720
86,770
$240,930
EXERCISE 2-9
(a) MANTLE COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2014
Work in process, May 1 …………………………………. $ 14,700
Direct materials used …………………………………….. $62,400
Direct labor …………………………………………………… 50,000
EXERCISE 2-9 (Continued)
(b) MANTLE COMPANY
(Partial) Income Statement
For the Month Ended May 31, 2014
Sales revenue ……………………………………………. $210,000
Cost of goods sold
Finished goods, May 1 …………………………. $ 12,600
Cost of goods manufactured………………… 149,200
(c) MANTLE COMPANY
(Partial) Balance sheet
May 31, 2014
Current assets:
Finished goods inventory …………………….. $ 9,500
EXERCISE 2-10
(a) Work in Process Inventory
April 30 $ 9,300 (#10, $5,200 + #11, $4,100)
(b) Finished Goods Inventory
April 30 $ 1,200 (#12)
(c) Gross Profit
Month
Job
Number
Sales
Cost of
Goods Sold
Gross
Profit
May
June
July
12
10
11/13
$ 1,500
12,000
24,000
$ 1,200
9,600
19,200
$ 300
2,400
4,800
EXERCISE 2-11
(a)
1
Supplies ……………………………………..
1,500
Accounts Payable ………………….
1,500
2
Service Contracts in Process ……….
720
Operating Overhead …………………….
480
Supplies ……………………………….
1,200
3
Service Contracts in Process ……….
48,000
Operating Overhead …………………….
12,000
Service Salaries and Wages …..
60,000
4
Operating Overhead …………………….
40,000
Cash …………………………………….
40,000
5
Service Contracts in Process
($48,000 X 90%) …………………………
43,200
Operating Overhead ………………
43,200
6
Cost of Completed Service
Contracts ………………………………….
75,000
Service Contracts in Process …
75,000
(b)
Service Contracts in Process
2.
720
75,000
(6)
3.
48,000
5.
43,200
16,920
EXERCISE 2-12
(a)
Lynn
Brian
Mike
Direct materials
$ 600
$ 400
$ 200
Auditor labor costs
5,400
6,600
3,375
Applied overhead
3,600
4,400
2,250
Total cost
$9,600
$11,400
$5,825
(c) Actual overhead
$11,000 (DR)
Applied overhead
10,250 (CR)
Balance
$ 750 (DR)
EXERCISE 2-13
(a) Predetermined overhead rate = Estimated overhead ÷ Estimated
decorator hours
= $920,000 ÷ 40,000 decorator hours
= $23 per decorator hour
(b) Service Contracts in Process (40,500 hrs X $23) ……
931,500
Operating Overhead………………………………..
931,500
(c)
Actual overhead
$942,800
Applied overhead
931,500
Balance
$ 11,300
underapplied
SOLUTIONS TO PROBLEMS
PROBLEM 2-1A
(b) See solution to part (e) for job cost sheets
(c) Raw Materials Inventory …………………………………….. 90,000
Accounts Payable ………………………………………. 90,000
Factory Labor ……………………………………………………. 70,000
(d) Work in Process Inventory …………………………………. 79,000
Raw Materials Inventory
($10,000 + $39,000 + $30,000) ………………….. 79,000
($50,000 X 140% of direct labor costs)