Exercise 15-19 (15 minutes)
(1)
Services in Process Inventory* …………………………..
9,900
Service Salaries Payable ………………………………….
9,900
Record direct labor.
*(5 x $500) + (12 x $200) + (100 x $50)
Services in Process Inventory ………………………….
Services in Process Inventory** …………………………..
Services Overhead ………………………………………….
Apply overhead.
**$9,900 x 50%
4,950
4,950
Exercise 15-20 (10 minutes)
Raw Materials Inventory ………………………………………..
3,108
Accounts Payable …………………………………………….
3,108
Record raw material purchases (in € millions).
Work in Process Inventory* ……………………………………
3,106
Raw Materials Inventory …………………………………..
3,106
Record raw materials used in production (in €
millions).
PROBLEM SET A
Problem 15-1A (80 minutes)
Part 1 Total manufacturing costs and the costs assigned to each job
306
307
308
April Total
From March
Direct materials ………………….
$ 29,000
$ 35,000
Direct labor ………………………..
20,000
18,000
Applied overhead* ……………..
10,000
9,000
Beginning work
in process ………………………
59,000
62,000
$ 121,000
Direct materials ………………….
Direct labor ……………………….
85,000
Applied overhead* ……………..
42,500
75,000
52,500
262,500
445,000
257,500
Part 2 Journal entries for April
a.
Raw Materials Inventory …………………………………………
500,000
Accounts Payable …………………………………………….
500,000
Record materials purchases.
b.
Work in Process Inventory ……………………………………..
455,000
Raw Materials Inventory ……………………………………
455,000
Assign direct materials to jobs.
c.
Work in Process Inventory ……………………………………..
340,000
Cash …………………………………………………………………
340,000
Record direct labor.
d.
Cash …………………………………………………………………
Record indirect labor.
Factory Overhead ……………………………………………..
170,000
Apply overhead to jobs.
Problem 15-1A (continued)
f.
[continued from prior page]
Factory Overhead …………………………………………………..
Raw Materials Inventory ……………………………………
Record indirect materials.
50,000
50,000
Factory Overhead …………………………………………………..
19,000
Cash …………………………………………………………………
19,000
Record factory utilities.
Factory Overhead …………………………………………………..
51,000
Accumulated Depreciation—Factory Equip ……….
51,000
Record other factory overhead.
Factory Overhead …………………………………………………..
Cash …………………………………………………………………
32,000
Record factory rent.
g.
Finished Goods Inventory (306 & 307) ……………………..
828,500
Work in Process Inventory …………………………..
828,500
Record jobs completed ($321,500 + $507,000).
h.
Cost of Goods Sold (306) ………………………………………..
321,500
Finished Goods Inventory …………………………..
321,500
Record cost of sale of job.
i.
Cash ………………………………………………………………………
635,000
Sales ………………………………………………………………..
635,000
Record sale of job.
j.
Cost of Goods Sold ………………………………………………..
5,000
Factory Overhead* ……………………………………………
5,000
Assign underapplied overhead.
*Overhead applied to jobs …..
Overhead incurred
Indirect materials……………………
Indirect labor …………………………
Factory rent …………………………..
Factory utilities ………………………
Factory equip. depreciation. …..
Problem 15–1A (Continued)
Part 3
MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct materials used ……………………………………………………….
$ 455,000
Direct labor used ……………………………………………………………….
340,000
Factory overhead applied …………………………………………………..
170,000
Total manufacturing costs …………………………………………………
965,000
Add work in process March 31 (Jobs 306 & 307) …………………
121,000
Total cost of work in process ……………………………………………..
Cost of goods manufactured ……………………………………………..
Part 4
Gross profit on the income statement for the month ended April 30
Sales …………………………………………………………………………………………….
$ 635,000
Cost of goods sold ($321,500 + $5,000) …………………………………………..
(326,500)
Gross profit …………………………………………………………………………………..
$ 308,500
Presentation of inventories on the April 30 balance sheet
Inventories
Raw materials ………………………………………………………………………………
$ 75,000*
Work in process (Job 308) ……………………………………………………………..
257,500
Finished goods (Job 307) ………………………………………………………………
507,000
Total inventories …………………………………………………………………………..
$ 839,500
Problem 15-2A (75 minutes)
Part 1
a.
Dec. 31
Work in Process Inventory ……………………………………..
28,800
Raw Materials Inventory …………………………..
28,800
Record direct materials costs for
Jobs 402 and 404 ($10,200 + 18,600).
b.
Dec. 31
Work in Process Inventory ……………………………………..
59,800
Factory Wages Payable …………………………..
59,800
Record direct labor costs for
Jobs 402 and 404 ($36,000 + $23,800).
c.
Dec. 31
Work in Process Inventory ……………………………………..
119,600
Factory Overhead ……………………………………………..
119,600
Allocate overhead to Jobs 402 and 404
at 200% of direct labor cost assigned.
d.
Dec. 31
Factory Overhead …………………………………………………..
5,600
Raw Materials Inventory …………………………..
5,600
Add cost of indirect materials
to actual factory overhead.
e.
Dec. 31
Factory Overhead …………………………………………………..
8,200
Factory Wages Payable …………………………..
8,200
Accrue indirect labor and assign it to
actual factory overhead.
Part 2
Dec. 31
9,200
Factory Overhead ……………………………………………..
9,200
Close underapplied overhead.
Problem 15-2A (continued)
Part 3
BERGAMO BAY COMPANY
Trial Balance
December 31, 2019
Debit
Credit
Cash ………………………………………………………………………..
$170,000
Accounts receivable ………………………………………………….
75,000
Raw materials inventory* …………………………………………..
45,600
208,200
Finished goods inventory …………………………………………
15,000
Prepaid rent ……………………………………………………………..
3,000
Accounts payable …………………………………………………….
$ 17,000
Factory wages payable ……………………………………………..
Notes payable …………………………………………………………..
68,000
25,000
Common stock ……………………………………………………….
50,000
Retained earnings …………………………………………………….
271,000
Sales ………………………………………………………………………..
373,000
Cost of goods sold ($218,000 + $9,200) …………………………..
227,200
Factory overhead ………………………………………………………
0
Operating expenses…………………………………………………..
60,000
_______
Totals …………………………..…………………………………………..
$804,000
$804,000
Problem 15-2A (continued)
Part 4
BERGAMO BAY COMPANY
Income Statement
For Year Ended December 31, 2019
Sales ……………………………………………………………………………………
$373,000
Cost of goods sold ……………………………………………………………….
(227,200)
Gross profit ………………………………………………………………………….
145,800
Operating expenses ……………………………………………………………..
(60,000)
Net income …………………………………………………………………………..
$ 85,800
BERGAMO BAY COMPANY
Balance Sheet
December 31, 2019
Assets
Cash …………………………………………………………………………..
$170,000
Accounts receivable ……………………………………………………
75,000
Inventories
Raw materials inventory ……………………………………………..
$ 45,600
Work in process inventory ………………………………………….
208,200
Finished goods inventory …………………………………………..
15,000
268,800
Prepaid rent ……………………………………………………….
3,000
Total assets ……………………………………………………….
$516,800
Accounts payable ……………………………………………………….
Common stock ……………………………………………………….
50,000
Retained earnings ($271,000 + $85,800) ………………………….
356,800
Total liabilities and equity ……………………………………………
$516,800
Problem 15-2A (concluded)
Part 5
This $5,600 error would cause the costs for Job 404 to be understated.
Since Job 404 is in process at the end of the period, work in process
inventory and total assets would both be understated on the balance sheet.
In addition, the over– or underapplied overhead would change by $5,600.
Problem 15-3A (70 minutes)
Part 1
JOB COST SHEETS
Job No. 136
Job No. 138
Materials …………..
$ 48,000
Materials …………..
$ 19,200
Labor ……………….
12,000
Labor ……………….
37,500
Overhead ………….
24,000
Overhead ………….
75,000
Total cost …………
$ 84,000
Total cost …………
$131,700
Job No. 137
Job No. 139
Materials …………..
$ 32,000
Materials …………..
$ 22,400
Labor ……………….
10,500
Labor ……………….
39,000
Overhead ………….
21,000
Overhead ………….
78,000
Total cost …………
$ 63,500
Total cost …………
$139,400
Job No. 140
Materials …………..
Labor ……………….
Overhead ………….
6,000
Total cost …………
$ 15,400
Part 2
a.
Raw Materials Inventory …………………………………………
200,000
Accounts Payable …………………………………………….
200,000
Record materials purchases.
b.
128,000
Raw Materials Inventory ……………………………………
147,500
Record direct & indirect materials.
Cash …………………………………………………………………
Record other factory overhead.
Problem 15-3A (Continued)
[continued from prior page]
d.
Work in Process Inventory ……………………………………..
102,000
Factory Overhead …………………………………………………..
24,000
Cash …………………………………………………………………
126,000
Record direct & indirect labor.
e.
Work in Process Inventory ……………………………………..
177,000
Factory Overhead ……………………………………………..
177,000
Apply overhead to jobs
[($12,000 + $37,500 + $39,000) x 200%].
f.
Finished Goods Inventory ………………………………………
355,100
Work in Process Inventory …………………………..
355,100
Record completion of jobs
($84,000 + $131,700 + $139,400).
g.
Accounts Receivable ……………………………………………..
525,000
Sales ………………………………………………………………..
525,000
Record sales on account.
Cost of Goods Sold ………………………………………………..
215,700
Finished Goods Inventory …………………………..
215,700
Record cost of sales ($84,000 + $131,700).
h.
Factory Overhead …………………………………………………..
149,500
Accum. Depreciation—Factory Building ……………
Accum. Depreciation—Factory Equipment ………..
Prepaid Insurance …………………………………………….
Property Taxes Payable …………………………………….
Record other factory overhead.
i.
Work in Process Inventory ……………………………………..
27,000
Factory Overhead ……………………………………………..
Apply overhead to jobs
[($10,500 + $3,000) x 200%].
Problem 15–3A (Continued)
Part 3
GENERAL LEDGER ACCOUNTS
Raw Materials Inventory
(a)
200,000
(b)
147,500
Bal.
52,500
Work in Process Inventory
Factory Overhead
(b)
128,000
(f)
355,100
(b)
19,500
(e)
177,000
(d)
102,000
(c)
15,000
(i)
27,000
(e)
177,000
(d)
24,000
(i)
27,000
(h)
149,500
Bal.
78,900
Bal.
4,000
Part 4
Reports of Job Costs*
Work in Process Inventory
Job 137 ………………………………….
$ 63,500
Job 140 ………………………………….
15,400
Balance ………………………………….
$ 78,900
Finished Goods Inventory
Job 139 ………………………………….
$139,400
Balance ………………………………….
$139,400
Job 136 ………………………………….
$ 84,000
Job 138 ………………………………….
Balance ………………………………….
Problem 15-4A (35 minutes)
Part 1
a. Predetermined overhead rate
= = = 60%
b. Overhead costs charged to jobs
Direct
Applied
Job No.
Labor
Overhead (60%)
201 ……………………………………………………………….
$ 604,000
$ 362,400
202 ……………………………………………………………….
563,000
337,800
203 ……………………………………………………………….
298,000
178,800
204 ……………………………………………………………….
716,000
429,600
205 ……………………………………………………………….
314,000
188,400
206 ……………………………………………………………….
17,000
c. Overapplied or underapplied overhead determination
Actual overhead cost…………………………………….
$1,520,000
Less applied overhead cost …………………………..
1,507,200
Underapplied overhead …………………………..
$ 12,800
Part 2
Dec. 31
Cost of Goods Sold …………………………..……………………
Estimated overhead costs
Estimated direct labor cost
$1,500,000
$2,500,000
$1,500,000
[50 x 2,000 x $25]
Problem 15-5A (80 minutes)
JOB COST SHEET
Customer’s Name
Worldwide Company
Job No.
102
Direct Materials
Direct Labor
Overhead Costs Applied
Date
Requisition
Number
Amount
Time
Ticket
Number
Amount
Date
Rate
Amount
#35
33,750
#1–10
90,000
May —
80%
72,000
#36
12,960
Dir. Materials …………………………..
Dir. Labor…………………………..
Overhead …………………………..
Total
46,710
Total
90,000
JOB COST SHEET
Customer’s Name
Reuben Company
Job No.
103
Direct Materials
Direct Labor
Overhead Costs Applied
#37
17,500
65,000
May —
80%
52,000
#38
Requisition
Time
Ticket
SUMMARY OF COSTS
Dir. Materials …………………………..
Dir. Labor…………………………..
Overhead …………………………..
______
Total cost of Job …………………………..
.
Total
Total
Problem 15-5A (Continued)
MATERIALS LEDGER CARD
Item
Material M
Received
Issued
Balance
Date
Receiving
Report
Units
Unit
Price
Total
Price
Requi–
sition
Units
Unit
Price
Total
Price
Units
Unit
Price
Total
Price
May 1
200
250
50,000
250
62,500
450
250
250
33,750
315
250
78,750
MATERIALS LEDGER CARD
Item
Material R
Received
Issued
Balance
Date
Receiving
Report
Units
Unit
Price
Total
Price
Requi–
sition
Units
Unit
Price
Total
Price
Units
Unit
Price
Total
Price
May 1
95
180
16,200
185
180
180
12,960
113
180
180
75
180
MATERIALS LEDGER CARD
Item
Paint
Received
Issued
Balance
Date
Receiving
Report
Units
Unit
Price
Total
Price
Requi–
sition
Units
Unit
Price
Total
Price
Units
Unit
Price
Total
Price
May 1
55
75
4,125
1,125
40
75
3,000
Problem 15–5A (Continued)
GENERAL JOURNAL
a.
Raw Materials Inventory ………………………………………..
78,700
Accounts Payable …………………………………………….
78,700
Record materials purchases ($62,500+$16,200).
d.
Work in Process Inventory* …………………………..……….
155,000
Factory Overhead ………………………………………………….
19,250
Cash ………………………………………………………………..
174,250
Record direct & indirect labor.
*($90,000 + 65,000)
Factory Overhead ………………………………………………….
102,000
Cash ………………………………………………………………..
102,000
Record other factory overhead.
e.
Finished Goods Inventory ……………………………………..
208,710
Work in Process ………………………………………………
208,710
Record completion of jobs.
f.
Accounts Receivable …………………………………………….
400,000
Sales ……………………………………………………………….
400,000
Record sales on account.
Cost of Goods Sold ……………………………………………….
208,710
Finished Goods Inventory ………………………………..
208,710
Record cost of sales.
Work in Process Inventory* …………………………..……….
71,050
Factory Overhead ………………………………………………….
Raw Materials Inventory …………………………………..
72,175
Record direct & indirect materials.
*($33,750 + $12,960 + $17,500 + $6,840)
i.
Work in Process Inventory …………………………..………..
124,000
Factory Overhead …………………………………………….
124,000
Apply overhead ($72,000 + 52,000).
Problem 15–5A (Continued)
j. The ending balance in the Factory Overhead account is computed as:
Actual Factory Overhead
Miscellaneous overhead …………………….
$102,000
Indirect materials ……………………………….
1,125
Indirect labor ……………………………………..
19,250
Total actual factory overhead ……………..
122,375
PROBLEM SET B
Problem 15-1B (80 minutes)
Part 1
Total manufacturing costs and the costs assigned to each job
114
115
116
Sept. Total
From August
Direct materials …………………………..
$ 14,000
$ 18,000
Direct labor …………………………..
18,000
16,000
Applied overhead* ………………………
9,000
8,000
Beginning work
In process …………………………..
41,000
42,000
$ 83,000
For September
Direct materials …………………………..
Direct labor …………………………..
30,000
68,000
Applied overhead* ………………………
15,000
34,000
60,000
109,000
Total costs added in
September …………………………..
145,000
272,000
260,000
677,000
Total costs …………………………..
$186,000
$314,000
$260,000
$760,000
*Equals 50% of direct labor cost.
Part 2 Journal entries for September
a.
Raw Materials Inventory …………………………………………
400,000
Accounts Payable …………………………………………….
400,000
Record materials purchases.
b.
Work in Process Inventory ……………………………………..
350,000
Raw Materials Inventory ……………………………………
350,000
Assign direct materials to jobs.
Cash ………………………………………………………………..
Record and pay direct labor.
d.
Factory Overhead …………………………………………………..
Cash ………………………………………………………………..
Record and pay indirect labor.
e.
Work in Process Inventory ……………………………………..
109,000
Factory Overhead ……………………………………………..
109,000
Problem 15–1B (Continued)
f. [continued from prior page]
Factory Overhead …………………………………………………..
20,000
Cash ………………………………………………………………..
20,000
Record other factory overhead (rent).
Factory Overhead …………………………………………………..
12,000
Cash ………………………………………………………………..
12,000
Record other factory overhead (utilities).
Factory Overhead …………………………………………………..
30,000
Accum. Depreciation—Factory Equip ………………..
30,000
Record other factory overhead (depreciation).
Factory Overhead …………………………………………………..
30,000
Raw Materials Inventory ……………………………………
30,000
Record indirect materials.
g.
Finished Goods Inventory ………………………………………
500,000
Work in Process Inventory …………………………..
500,000
Record jobs completed ($186,000 + $314,000).
h.
Cost of Goods Sold ………………………………………………..
186,000
Finished Goods Inventory …………………………..
186,000
Record cost of sale of job.
i.
380,000
Sales ………………………………………………………………..
380,000
Record sale of job.
j.
Factory Overhead* …………………………………………………
Cost of Goods Sold ……………………………………………
Assign overapplied overhead.
Problem 15–1B (Continued)
Part 3
PEREZ MFG.
Schedule of Cost of Goods Manufactured
For Month Ended September 30
Direct materials used …………………………………………………
$350,000
Direct labor used……………………………………………………….
218,000
Factory overhead applied …………………………………………..
109,000
Total manufacturing costs ………………………………………….
677,000
Add work in process August 31 (Jobs 114 & 115) ………….
83,000
Total cost of work in process ……………………………………..
760,000
Deduct work in process, September 30 (Job 116) …………
Part 4
Gross profit on the income statement for the month ended September 30
Sales …………………………………………………………………………………………
$380,000
Cost of goods sold ($186,000 – $3,000) ……………………………………….
(183,000)
Gross profit ……………………………………………………………………………….
$197,000
Presentation of inventories on the September 30 balance sheet
Inventories
Raw materials ………………………………………………………………………….
$170,000*
Work in process (Job 116) ……………………………………………………….
260,000
Finished goods (Job 115) ……………………………………………………….
314,000
Total inventories ………………………………………………………………………
$744,000
Problem 15-2B (75 minutes)
Part 1
a.
Dec. 31
Work in Process Inventory …………………………..
12,200
Raw Materials Inventory …………………………..
12,200
Record direct materials costs for
Jobs 603 and 604 ($4,600 + $7,600).
b.
Dec. 31
Work in Process Inventory …………………………..
13,000
Factory Wages Payable …………………………..
13,000
Record direct labor costs for
Jobs 603 and 604 ($5,000 + $8,000).
c.
Dec. 31
Work in Process Inventory …………………………..
26,000
Factory Overhead ……………………………………………..
26,000
Allocate overhead to Jobs 603 and 604 at
d.
Dec. 31
Raw Materials Inventory …………………………..
e.
Dec. 31
Factory Wages Payable …………………………..
Accrue cost of indirect labor.