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Solutions Manual, Appendix 3A 31
Problem 3-14 (continued)
3. Gitano Products
Schedule of Cost of Goods Manufactured
Direct materials:
Be
g
innin
g
raw materials inventory…………….. $ 20,000
A
dd purchases of raw materials………………… 510,000
Manufacturin
g
overhead applied to work in
process ………………………………………………. 720,000
T
otal manufacturin
g
costs …………………………. 1,260,000
A
g
g
g
4. Unad
j
usted cost of
g
oods sold:
Be
g
innin
g
finished
g
oods inventory……………….. $ 260,000
A
dd: Cost of
g
oods manufactured…………………. 1,340,000
g
g
j
g
The underapplied overhead can either be closed out to Cost of Goods
Sold or allocated between Work in Process, Finished Goods, and Cost of
T
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32 Managerial Accounting, 16th Edition
Problem 3-14 (continued)
5. The amount of overhead cost in Work in Process was:
$24,000 direct materials cost × 160% = $38,400
The amount of direct labor cost in Work in Process is:
The completed schedule of costs in Work in Process was:
Direct materials …………………………… $24,000
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Solutions Manual, Appendix 3A 33
Problem 3-15 (120 minutes)
1. a. Raw Materials ………………………….…. 200,000
b. Work in Process ………………………….. 185,000
c. Manufacturin
g
Overhead……………….. 63,000
A
d. Work in Process ………………………….. 230,000
g
e. Manufacturin
g
Overhead……………….. 54,000
A
f.
A
dvertisin
g
Expense …………………….. 136,000
A
g
. Manufacturin
g
Overhead……………….. 76,000
A
h. Manufacturin
g
Overhead……………….. 102,000
A
i. Work in Process ………………………….. 390,000
g
Estimated total manufacturin
g
overhead cost
Predetermined =
overhead rate Estimated total amount of the allocation base
A
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34 Managerial Accounting, 16th Edition
Problem 3-15 (continued)
j
. Finished Goods ……………………………. 770,000
k.
A
ccounts Receivable …………………….. 1,200,000
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Solutions Manual, Appendix 3A 35
Problem 3-15 (continued)
2.
A
ccounts Receivable Sales
Raw Materials Cost of Goods Sold
Work in Process Manufacturin
g
Overhead
Bal. 21,000 (
j
) 770,000 (c) 63,000 (i) 390,000
(b) 185,000 (d) 90,000
g
Bal. 5,000
Finished Goods
A
dvertisin
g
Expense
Bal. 60,000 (k) 800,000 (f) 136,000
j
A
ccumulated Depreciation Utilities Expense
(
g
) 95,000 (c) 7,000
A
ccounts Payable Salaries Expense
(a) 200,000 (d) 110,000
g
Salaries & Wa
g
es Payable Rent Expense
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36 Managerial Accounting, 16th Edition
Problem 3-15 (continued)
3. Froya Fabrikker A/S
Schedule of Cost of Goods Manufactured
Direct materials:
Be
g
innin
g
raw materials inventory ………. $ 30,000
Direct labor ……………………………………… 230,000
Manufacturin
g
overhead applied to work in
process …………………………………………. 390,000
T
otal manufacturin
g
costs……………………. 805,000
A
g
g
g
4. Manufacturin
g
Overhead …………………….. 5,000
Cost of Goods Sold ………………………… 5,000
Schedule of cost of
g
oods sold:
Be
g
innin
g
finished
g
oods inventory……… $ 60,000
A
dd: Cost of
g
oods manufactured……….. 770,000
g
A
T
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 3A 37
Problem 3-15 (continued)
5. Froya Fabrikker A/S
Income Statement
Sales ……………………………………..…….. $1,200,000
Cost of
g
oods sold …………………………… 795,000
Gross mar
g
in ………………………………….. 405,000
Sellin
g
and administrative expenses:
A
dvertisin
g
expense ………………………. $136,000
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38 Managerial Accounting, 16th Edition
Problem 3-16 (60 minutes)
1. a. Raw Materials ………………………….…….. 275,000
b. Work in Process ……………………………… 220,000
g
c. Work in Process ……………………………… 180,000
Manufacturin
g
Overhead…………………… 72,000
A
d. Manufacturin
g
Overhead…………………… 13,000
e. Manufacturin
g
Overhead…………………… 57,000
f.
A
dvertisin
g
Expense ………………………… 140,000
g
. Manufacturin
g
Overhead…………………… 88,000
A
h. Work in Process ……………………………… 297,000
g
Estimated total manufacturing overhead cost
Predetermined =
overhead rate Estimated total amount of the allocation base
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Solutions Manual, Appendix 3A 39
Problem 3-16 (continued)
i. Finished Goods ……………………………….. 675,000
j
. Cash …………………………………………….. 1,250,000
2.
Raw Materials Work in Process
Bal. 25,000 (b) 280,000 Bal. 10,000 (i) 675,000
Finished Goods Manufacturin
g
Overhead
Bal. 40,000 (
j
) 700,000 (b) 60,000 (h) 297,000
(i) 675,000 (c) 72,000
g
Cost of Goods Sold
j
3. Manufacturing overhead is overapplied by $7,000 for the year. The en-
try to close this balance to Cost of Goods Sold would be:
g
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40 Managerial Accounting, 16th Edition
Problem 3-16 (continued)
4.
Gold Nest Company
Income Statement
Sales …………………………………………….. $1,250,000
Cost of
g
oods sold
($700,000 – $7,000) ………………………. 693,000
Gross mar
g
in ………………………………….. 557,000
Sellin
g
and administrative expenses: