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Solutions Manual, Chapter 3 1
Chapter 3
Job-Order Costing: Cost Flows and External
Reporting
Questions
3-1 The link that connects these two sched-
ules is the cost of goods manufactured. It is cal-
Work in Process. The applied overhead cost for
actual overhead cost exceeds the amount of over-
head cost applied to Work in Process inventory
during the period. Overapplied overhead occurs
may be fixed and the actual amount of the alloca-
tion base may be less than estimated at the be-
ginning of the period. In this situation, the
amount of overhead applied to inventory will be
less than the actual overhead cost incurred.
3-7 The total manufacturing costs includes
the raw materials used production (less any indi-
the cost of goods manufactured equals the cost
3-10 Direct labor costs are added to Work in
Process as goods are being manufactured. Once
goods are completed, their manufacturing costs
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2 Managerial Accounting, 15th edition
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Solutions Manual, Appendix 3A 3
Chapter 3: Applying Excel
The completed worksheet is shown below.
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4 Managerial Accounting, 16th Edition
Chapter 3: Applying Excel (continued)
[Note: To display formulas in cells instead of their calculated amounts, con-
sult Excel Help.]
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Solutions Manual, Appendix 3A 5
Chapter 3: Applying Excel (continued)
1. When the estimated total amount of the allocation base is changed to
The predetermined overhead rate has increased from $4.00 per ma-
chine-hour to $5.00 per machine-hour because the estimated total
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
6 Managerial Accounting, 16th Edition
Chapter 3: Applying Excel (continued)
2. With all of the changes in the data, the worksheet should look like the
following:
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Solutions Manual, Appendix 3A 7
Chapter 3: Applying Excel (continued)
3. When the estimated total amount of the allocation base is changed to
The manufacturing overhead is now overapplied by $10,000 rather than
underapplied by $10,000 as it was when the estimated total amount of
the allocation base was 10,000 machine-hours higher. This occurred be-
cause the predetermined overhead rate was $2.00 per machine-hour
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8 Managerial Accounting, 16th Edition
Chapter 3: Applying Excel (continued)
4. When the estimated total amount of the allocation base is changed to
In part 2 above, manufacturing overhead was underapplied by $10,000.
Manufacturing overhead is now underapplied by $20,000. This occurred
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Solutions Manual, Appendix 3A 9
The Foundational 15
1. The journal entry to record raw materials used in production is:
2. The ending balance in Raw Materials is:
Raw Materials
3. The journal entry to record the labor costs is:
Work in Process ……………………….. 600,000
4. The total manufacturing overhead applied to production is computed as
follows:
A
ctual direct labor-hours (a) ………………………. 41,000
5. The total manufacturing cost added to work in process is:
Raw materials used in production………………. $ 480,000
T
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10 Managerial Accounting, 16th Edition
The Foundational 15 (continued)
6. The journal entry is recorded as follows:
7. The ending balance in Work in Process is computed as follows:
Work in Process
Be
g
. Bal. 18,000
8. The total actual manufacturing overhead cost is as follows:
Indirect labor ……………………………….…….. $150,000
T
9. The overapplied overhead is computed as follows:
ctual manufacturin
overhead cost (a)………. $650,000
‒
10. The cost of goods available for sale is computed as follows:
Be
g
innin
g
finished
g
oods inventory ……………. $ 35,000
A
g
11. The journal entry is recorded as follows: