297
CHAPTER 10
ACCOUNTING SYSTEMS FOR
MANUFACTURING OPERATIONS
CLASS DISCUSSION QUESTIONS
1. Managerial accounting differs from financial
accounting in the following ways:
(1) Financial accounting records and re-
(2) Financial accounting reports information
on a periodic basis (monthly, quarterly,
or yearly), while managerial accounting
2. For a company that produces desktop com-
3. Product cost information is used by manag-
c. Process cost systems accumulate costs
for each department or process within a
factory.
are issued to indicate release of the proper
amount of materials from the storeroom.
7. a. The clock card is a means of recording
the hours spent by employees in the
a. Summary of the materials requisitions
9. The use of a predetermined factory over-
head rate in job order cost accounting as-
298
10. a. The predetermined factory overhead
rate is determined by dividing the bud-
11. a. (1) If the amount of factory overhead
12. The simplest satisfactory procedure for
14. Job order cost accumulation would be most
appropriate for professional service firms
head would be applied using a predeter-
mined overhead rate. The costs accumu-
cost, and instant availability.
b. JIT processing combines traditional
EXERCISES
E10–1
E10–2
a. Direct materials cost
f. Factory overhead cost
E10–3
E10–4
a. Period cost
j. Product cost
E10–5
a. period
e. direct materials
300
E10–6
E10–7
a.
Cost of goods sold:
b.
Direct materials cost:
c.
Direct labor cost:
301
E10–8
a.
RECEIVED ISSUED BALANCE
Receiving
Report
Number
Quantity
Unit
Price
Materials
Requi-
sition
Number
Quantity
Amount
Date
Quantity
Amount
Unit
Price
b. Ending wire cable balance:
302
E10–9
b.
Balance Sheet
Statement of Assets =Liabilities +Stockholders’ Equity Income
Cash Flows Work in Factory Statement
Materials + Process +Overhead
E10–10
a. Materials purchases ……………………………………………… $1,060,000*
c.
Polyester
Fabric Filling Lumber Glue
303
E10–11
a. Factory labor costs transferred to Work in Process: $40,350*
b.
Balance Sheet
Statement of Assets =Liabilities +Stockholders’ Equity Income
Cash Flows Work in Factory Wages Statement
Process +Overhead =Payable
E10–12
Supporting Calculations:
Labor Costs (Hourly Rate × Hours)
Direct
Labor
Hourly (sum of Indirect
Rate Job 560A Job 560B Job 560C job costs) Labor
b. The direct labor costs in the completed jobs (Jobs 560A and 560B) would
304
E10–13
a. Factory labor costs transferred to Work in Process: $ 18,000*
Factory labor costs transferred to Factory Overhead: $1,750
c.
Balance Sheet
Statement of Assets =Liabilities +Stockholders’ Equity Income
Cash Flows Work in Factory Statement
Process + Overhead
E10–14
305
E10–15
The estimated shop overhead is determined as follows:
Shop and repair equipment depreciation ………………………………….. $ 91,000
E10–16
a. Estimated annual operating room overhead: $1,260,000
Estimated operating room activity base (number of operating room hours):
b. Shirlee Greer’s procedure: