PROBLEM 2-1B (Continued)
Finished Goods Inventory ………………………………. 84,000
(f) Accounts Receivable …………………………………….. 137,000
(g)
Work in Process
Beginning balance
Direct materials
Direct labor
Manufacturing overhead
25,000
35,000
24,000
35,200
84,000
Cost of completed jobs 25 and 26
Ending balance
35,200
Job No. 27:
Direct Materials ………………………………………………………. $13,000
(h)
Manufacturing Overhead
Actual
42,500
Applied
35,200
7,300
PROBLEM 2-2B
(a)
Work in Process Inventory
1/1 Balance (1) 111,000
Direct materials (2) 97,000
Direct labor (3) 144,000
Manufacturing overhead (4)180,000
Completed work (5) (c) 344,000
12/31 Balance 188,000
(1)
Job 7650
Job 7651
$ 63,000
48,000
$111,000
(3)
Job 7650
Job 7651
Job 7652
$ 36,000
40,000
68,000
$144,000
(2)
Job 7650
Job 7651
Job 7652
$ 32,000
30,000
35,000
$ 97,000
(4)
Job 7650
Job 7651
Job 7652
$ 45,000
50,000
85,000
$180,000
(5) (a) Job 7650
Beginning balance …………………………..…………….. $ 63,000
Direct materials ……………………………………………… 32,000
(b) Job 7651
Beginning balance …………………………..…………….. $ 48,000
(c) Total cost of completed work
Job 7650 ……………………………………………………….. $176,000
PROBLEM 2-2B (Continued)
Work in process balance ……………………………………….. $188,000
Unfinished job No. 7652 …………………………………………. $188,000 (a)
(a) Current year’s cost
Direct materials……………………… $ 35,000
(b) Actual overhead costs
Incurred on account ………………………………………. $135,000
Indirect materials …………………………………………… 12,000
Applied overhead costs
Job 7650………………………………………………………… $ 45,000
Actual overhead …………………………………………………… $182,500
Cost of Goods Sold ………………………………………………. 2,500
(c) Sales revenue (given) ………………………………… $490,000
Cost of goods sold
Add: Job 7648 ………………………………………….. $ 93,000
Job 7649 ………………………………………….. 62,000
PROBLEM 2-3B
(a)
(i) Raw Materials Inventory ……………………………………. 4,000
Accounts Payable ……………………………………… 4,000
(ii) Work in Process Inventory …………………………..……. 5,300
Manufacturing Overhead …………………………………… 1,500
Raw Materials Inventory …………………………….. 6,800
(iii) Finished Goods Inventory …………………………..…….. 20,190
Work in Process Inventory …………………………. 20,190
Job
Direct
Materials
Direct
Labor
Manufacturing
Overhead*
Total
Costs
Stiner
Alton
Herman
$3,000
2,600
3,200
$2,400
2,200
2,100
$1,680
1,540
1,470
$ 7,080
6,340
6,770
$20,190
*70% of direct labor amount
Cash ………………………………………………………………… 36,000
PROBLEM 2-3B (Continued)
(b)
Work in Process Inventory
5/1 Balance 12,200
Direct materials 5,300
Direct labor 5,000
Overhead applied 3,500
5/31 Completed work 20,190
5/31 Balance 5,810
Job: Smith (Direct materials $1,900 + Direct labor $2,300 +
(d) ROBERT PEREZ COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2014
Work in process, May 1 ……………………………………. $12,200
Direct materials used ………………………………………. $5,300
Direct labor ……………………………………………………… 5,000
PROBLEM 2-4B
(a) Department A: $720,000 ÷ $600,000 = 120% of direct labor cost.
(b)
Department
Manufacturing Costs
A
B
C
Direct materials
Direct labor
Overhead applied
Total
$ 92,000
48,000
57,600
$197,600
*
$ 86,000
35,000
56,000
$177,000
**
$ 64,000
50,400
75,600
$190,000
***
(c)
Department
Manufacturing Overhead
A
B
C
Incurred
Applied
Under (over) applied
$60,000
57,600
$ 2,400
$60,000
56,000
$ 4,000
$72,100
75,600
$ (3,500)
PROBLEM 2-5B
(a) $88,900 ($80,000 + $8,900).
(b) $20,500 [($19,000 + $90,400) – $88,900 (See (a))].
(c) $27,200 (Given in Other data—$19,000 + $8,200).
(d) $90,000 ($117,000 manufacturing overhead applied ÷ 130%).
(i) $308,750 (Same as (f)).
(j) $315,750 [$145,000 + $308,750 – $138,000 (Given in Other data)].
(k) $138,000 (Given in Other data).
BYP 2-1 DECISION-MAKING AT CURRENT DESIGNS
Cost for one kayak:
Direct Materials
Polyethylene powder 54 pounds @ $1.50 per pound $ 81
Finishing kit 1 kit @ $170 170
Direct Labor
More skilled 2 hours @ $15 per hour 30
BYP 2-2 DECISION-MAKING ACROSS THE ORGANIZATION
(a) The manufacturing cost element that is responsible for the fluctuating
unit costs is manufacturing overhead. Manufacturing overhead is being
(b) The solution is to apply overhead using a predetermined overhead rate
based on a relevant basis of production activity. Based on actual overhead
incurred and using batches of product TC-1 as the activity base, the
(c) The quarterly results using a predetermined overhead rate based on
batches produced are as follows:
Quarter
Costs
1
2
3
4
Direct materials
Direct labor
Manufacturing overhead
Applied
($16,000 X batches)
Total (a)
$100,000
60,000
80,000
$240,000
$220,000
132,000
176,000
$528,000
$ 80,000
48,000
64,000
$192,000
$200,000
120,000
160,000
$480,000
Production in batches (b)
5
11
4
10
Unit cost (per batch)
(a) ÷ (b)
$ 48,000
$ 48,000
$ 48,000
$ 48,000
unit costs.)