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Solutions Manual, Appendix 3A 11
The Foundational 15 (continued)
12. The ending balance in Finished Goods is:
Finished Goods
13. The adjusted cost of goods sold is computed as follows:
Be
g
innin
g
finished
g
oods inventory ……………. $ 35,000
Cost of
g
oods manufactured…………………….. 1,680,000
g
14. and 15.
The gross margin and net operating income are computed as follows:
Sales ……………………………………………….. $2,800,000
g
Note: The selling and administrative expenses ($607,000) include selling
g
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12 Managerial Accounting, 16th Edition
Exercise 3-1 (10 minutes)
a. Raw Materials ……………………. 80,000
b. Work in Process …………………. 62,000
g
c. Work in Process …………………. 101,000
g
d. Manufacturin
g
Overhead ……… 175,000
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Solutions Manual, Appendix 3A 13
Exercise 3-2 (20 minutes)
Requirement 1
Cash Raw Materials
Work in Process Finished Goods
g
Manufacturin
g
Overhead Cost of Goods Sold
(b) 11,000 (e) 152,000 (
g
) 342,000
Requirement 2: The adjusted cost of goods sold is shown above as the
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
14 Managerial Accounting, 16th Edition
Exercise 3-3 (20 minutes)
1. Schedule of Cost of Goods Manufactured:
Direct materials:
Be
g
innin
g
raw materials inventory ………….. $12,000
A
dd: Purchases of raw materials…………….. 30,000
Direct labor …………………………………………... 58,000
Manufacturin
g
overhead applied to work in
process ………………………………………………. 87,000
T
otal manufacturin
g
costs ………………………… 164,000
A
g
2. Schedule of Cost of Goods Sold:
Be
g
innin
g
finished
g
oods inventory …………….. $ 35,000
A
dd: Cost of
g
oods manufactured ………………. 155,000
g
g
A
A
T
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 3A 15
Exercise 3-4 (10 minutes)
1. Manufacturin
g
overhead incurred (a)……. $215,000
A
ctual direct labor-hours …………………… 11,500
2. Because manufacturing overhead is underapplied, the journal entry
g
Exercise 3-5 (30 minutes)
1. a. Raw Materials ………………………….……… 210,000
b. Work in Process …………………………….… 178,000
c. Work in Process ………………………………. 90,000
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Solutions Manual, Appendix 3A 17
Exercise 3-6 (30 minutes)
1. Mason Company’s schedule of cost of goods manufactured is as follows:
Direct materials:
Be
g
innin
g
raw materials inventory ……………… $ 7,000
A
T
Direct labor …………………………………………..… 70,000
Manufacturin
g
overhead applied to work in pro-
cess ……………………………………….……………
90,000
T
otal manufacturin
g
costs…………………………… 270,000
A
g
2. Mason Company’s schedule of cost of goods sold is as follows:
Be
g
innin
g
finished
g
oods inventory ………… $ 20,000
A
dd: Cost of
g
oods manufactured ………….. 275,000
Cost of
g
oods available for sale ……………… 295,000
A
* Actual manufacturing overhead cost of $80,000 ‒ Manufacturing over-
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18 Managerial Accounting, 16th Edition
Exercise 3-6 (continued)
3.
Mason Company
Income Statement
Sales …………………………………………………….. $524,000
Cost of
g
oods sold ($260,000
–
$10,000)………. 250,000
Gross mar
g
in ………………………………………….. 274,000
Sellin
g
and administrative expenses:
Sellin
g
expenses …………………………………. $140,000
A
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Solutions Manual, Appendix 3A 19
Exercise 3-7 (15 minutes)
1.
A
ctual manufacturin
g
overhead costs (a) … $473,000
2. Direct materials:
Be
g
innin
g
raw materials inventory ………. $ 20,000
A
dd: purchases of raw materials…..…….. 400,000
T
Direct labor ……………………………………… 60,000
Manufacturin
g
overhead applied to work in
process ………………………………………… 485,000
T
otal manufacturin
g
costs …………………… 920,000
A
g
g
g
‒
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20 Managerial Accounting, 16th Edition
Exercise 3-8 (15 minutes)
1. Item (a):
A
ctual manufacturin
g
overhead costs incurred for the
year.
2. The journal entry to close the balance in the Manufacturing Overhead
account to Cost of Goods Sold is:
3. The underapplied overhead is allocated to Work in Process, Finished
Goods, and Cost of Goods Sold based on the percentage of total over-
head applied during the year that resides in each account as of the end
of the year:
T
Using these percentages, the journal entry would be as follows: