Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
Exercise 15-19 (20 minutes)
2.
Total cost of job in process (given) …………………………………
$ 50,000
Exercise 15–20 (15 minutes)
1. Overhead rate = Total overhead applied / Total direct labor costs
= $1,800,000 / $3,000,000 = 60%
2.
Ending balance of Work in Process Inventory ………………..
$ 71,000
–
–
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
956
Exercise 15-21 (25 minutes)
1.
TYLER CORP.
Income Statement
For Month Ended December 31
Sales ……………………………………………………..
$36,000
Cost of goods sold …………………………………
28,400
2. NOTE: Shaded amounts must be solved for.
Raw Materials Inventory
Beginning
0
Purchases
18,400
12,000
Direct materials
0
Indirect materials
Ending
6,400
Work in Process Inventory
Beginning
0
Direct materials
12,000
Direct labor
18,400
applied*
32,000
manufactured
Ending
8,000
Beginning
0
manufactured
28,400
Cost of goods sold
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Exercise 15-22 (15 minutes)
1a. Job 2 and Job 5 are in process at May 31.
Work in Process Inventory
April
May
Total
Job 2 ………………………………………..
$ 650
$1,840
$2,490
Job 5 …………………………………………..
1b. Job 3 is completed but not sold at May 31.
Finished Goods Inventory
April
May
Total
Job 3 ………………………………………..
$1,200
$2,630
$3,830
2. Job 1 and Job 4 are completed and sold during May.
Total job costs
April
May
Total
Job 1 ………………………………………..
$ 800
$2,120
$2,920
Job 4 …………………………………………..
475
Gross profit
Total
3,795
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
Exercise 15–23 (10 minutes)
1. Jobs 48 and 50 are in process at June 30.
Work in Process Inventory
Cost at June 30
2. Job 49 is completed but not sold at June 30.
Cost at June 30
3. Jobs 46 and 47 are completed and sold at June 30.
Cost of goods sold
Cost for June
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
Exercise 15–24 (10 minutes)
1.
Schedule of Cost of Goods Manufactured
Direct materials used ………………………………………………….
$ 14,120
Direct labor ……………………………………………………….
Total manufacturing costs …………………………..……………..
Add: work in process inventory, beginning …………………
Total cost of work in process …………………………..
Less: work in process inventory, ending …………………….
2.
Sales ……………………………………………………..
$40,000
Cost of goods sold (computed below) ……………
36,390
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Exercise 15-25 (15 minutes)
Factory Overhead—Star
Indirect materials
22,000
Indirect labor
46,000
Factory Overhead …………………………………..
3,000
Cost of Goods Sold …………………………..
3,000
Close overapplied overhead for Star.
Factory Overhead—Valle
Indirect materials
12,500
105,000
Applied overhead
Indirect labor
1,000
Factory Overhead …………………………..…
1,000
Close underapplied overhead for Valle.
Exercise 15-26 (15 minutes)
1. Predetermined overhead rate = Estimated overhead costs = $750,000
Estimated dir. mtls. costs $625,000
= 120% of direct materials cost
2.
Factory Overhead
Factory Overhead ………………………….
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
2.
Factory Overhead
Actual …………..
1,670,000
Applied* ………….
1,680,000
Overapplied …….
10,000
*Overhead applied = 350% x $480,000 = $1,680,000.
3.
Exercise 15-28 (15 minutes)
1.
Predetermined Overhead Rate
2.
Total Job Cost
3.
Price Quote
Total job cost ……………………………………………………………….
$564
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
Exercise 15-29 (20 minutes)
1. Estimated cost of the architectural job
Direct labor type
Estimated
hours
Hourly rate
Total cost
Architects …………………
150
$300
$ 45,000
Staff …………………………
300
500
Total direct labor cost ……………………………………………….
Overhead applied (175% of direct labor cost) …………….
2. $71,875. At a price of $285,000, Frey’s profit is $71,875 (computed as
$285,000 – $213,125).
No. Frey would not earn its target profit of $80,000.
3. Frey’s bid price to earn the desired profit is:
Total estimated cost ………………………………………………….
Desired profit …………………………………………………………….
Exercise 15–30 (15 minutes)
1. Cost of completing tax return
Direct labor type
Hours used
Hourly rate
Total cost
Partner ……………………..
5
$500
$ 2,500
Senior manager …………
100
Total direct labor cost ………………………………………………
2. Gross profit from tax return
Services fee charged …………………………..…………………….
$20,000
Total cost (from part 1) ………………………………………………..
14,850
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
963
PROBLEM SET A
Problem 15-1A (25 minutes)
1. Total cost of direct materials requisitioned in June equals the total direct
materials costs accumulated on the three jobs less the amount of direct
materials cost assigned to Job 5 in May.
Job 5 ……………………………………………………..
Job 6 …………………………………………………….
Job 7 …………………………………………………….
2. Total cost of direct labor used in June equals the total direct labor costs
accumulated on the three jobs less the amount of direct labor cost
assigned to Job 5 in May.
Job 5 ……………………………………………………..
$8,000
Job 6 …………………………………………………….
Job 7 …………………………………………………….
3. Predetermined overhead rate equals the ratio of the amount of overhead
applied to jobs divided by the amount of direct labor cost used on them.
Job 5
Job 6
Job 7
Overhead ………………………….
$10,500
4. Total cost transferred to Finished Goods Inventory in June equals the
total costs of the two completed jobs (5 and 6) for June.
Job 5
Job 6
Total
Direct materials ………………..
$15,000
$33,000
$48,000
Overhead ………………………….
964
Problem 15-2A (80 minutes)
Part 1 Overhead applied to each job in April (50% of direct labor cost)
306
307
308
April Total
Direct labor ………………
$85,000
$150,000
$105,000
$340,000
Part 2 Total manufacturing costs and the costs assigned to each job
306
307
308
April Total
March
Direct materials …………
$ 29,000
$ 35,000
—
—
Direct labor ……………….
20,000
18,000
—
—
Overhead applied ………
10,000
—
—
59,000
62,000
—
Direct materials …………
135,000
220,000
Direct labor ………………
85,000
150,000
105,000
Overhead applied* ……..
Costs added in April ……
Part 3 Journal entries for April
a.
Raw Materials Inventory ………………………………..
500,000
Accounts Payable ……………………………………
500,000
Record materials purchases.
455,000
Raw Materials Inventory …………………………..
455,000
Assign direct materials to jobs.
Work in Process Inventory …………………………….
Cash ……………………………………………………….
Record direct labor used.
e.
Cash ……………………………………………………….
Record indirect labor used.
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Problem 15-2A (continued)
f.
Work in Process Inventory …………………………………
170,000
Factory Overhead ………………………………………….
170,000
Apply overhead to jobs.
g.
Factory Overhead ………………………………………………
102,000
Cash ……………………………………………………………
h.
Finished Goods Inventory ………………………………….
828,500
Record jobs completed ($321,500 + $507,000).
i.
Cost of Goods Sold ……………………………………………
321,500
Finished Goods Inventory …………………………….
321,500
Record cost of sale of job 306.
j.
Cash …………………………………………………………………
635,000
Sales ……………………………………………………………
635,000
Record sale of job.
k.
Cost of Goods Sold ……………………………………………
5,000
Factory Overhead* ……………………………………….
5,000
Close underapplied overhead.
Actual overhead incurred
Factory rent …………………………
Factory equip. depreciation. …
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
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Problem 15-2A (Continued)
Part 4
MARCO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct materials used ……………………………………………….
$ 455,000
Direct labor ……………………………………………………….
340,000
170,000
Total manufacturing costs …………………………..…………..
Total cost of work in process …………………………..
Cost of goods manufactured …………………………..
Part 5
Gross profit on income statement for month ended April 30
Sales ……………………………………………………………..
$ 635,000
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
967
Problem 15-3A (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
c.
Dec. 31
Work in Process Inventory ……………….
Factory Overhead ……………………….
Apply 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
Record indirect materials.
e.
Dec. 31
Factory Overhead …………………………….
8,200
Factory Wages Payable ………………
8,200
Record indirect labor.
Part 2
Factory Overhead
Actual overhead (given)
115,000
119,600
Applied overhead to Jobs 402, 404
Dec. 31
Cost of Goods Sold ………………………….
9,200
Factory Overhead ……………………….
9,200
Close underapplied overhead.
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968
Problem 15-3A (continued)
Part 3
BERGO BAY COMPANY
List of Account Balances
December 31
Debit
Credit
Cash …………………………………………………..
$170,000
Accounts receivable …………………………...
75,000
Raw materials inventory* ……………………..
45,600
208,200
Finished goods inventory ……………………
15,000
Prepaid rent ……………………………………….
Accounts payable ……………………………….
Factory wages payable ………………………..
Notes payable …………………………………….
Common stock …………………………..………
Retained earnings (prior year) ……………..
Sales ………………………………………………….
373,000
Cost of goods sold ($218,000 + $9,200) …….
227,200
Factory overhead ………………………………..
0
General and administrative expenses …..
60,000
_________
Totals ………………………………………………….
$804,000
$804,000
* Raw materials inventory
Less: Direct materials used for Jobs 402 and 404 ……
Less: Indirect materials used …………………………………
** Work in process inventory
Job 402
Job 404
Total
Direct materials ………
$ 10,200
$18,600
$ 28,800
Direct labor …………….
Overhead ………………..
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
969
Problem 15-3A (continued)
Part 4
BERGO BAY COMPANY
Income Statement
For Year Ended December 31
Sales ……………………………………………………
$373,000
Cost of goods sold ……………………………….
(227,200)
Gross profit ………………………………………….
General and administrative expenses ……
BERGO BAY COMPANY
Balance Sheet
December 31
Assets
Cash …………………………………………………….
$170,000
Accounts receivable ……………………………..
75,000
Raw materials inventory ………………………
Finished goods inventory …………………….
Total assets ………………………………………….
$516,800
Liabilities
Accounts payable …………………………………
$ 17,000
Factory wages payable …………………………
Notes payable ………………………………………
68,000
25,000
Total liabilities ………………………………………
Equity
Common stock ……………………………………..
50,000
Retained earnings ($271,000 + $85,800) …..
Total equity…………………………..………………
Total liabilities and equity ……………………..
$516,800
970
Problem 15-3A (concluded)
Part 5
Understated total assets.
Explanation: This $5,600 error would cause the costs for Job 404 to be
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
971
Problem 15-4A (60 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 ……
Total cost ……
Total cost …..
Job No. 137
Job No. 139
Materials …….
$ 32,000
Materials …….
$ 22,400
Labor ………….
10,500
Labor …………
39,000
Overhead ……
21,000
Overhead ……
Total cost ……
Total cost …..
Job No. 140
Materials …….
$ 6,400
Labor …………
3,000
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 …………………………..
128,000
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972
Problem 15-4A (Continued)
c.
Work in Process Inventory …………………………….
102,000
Cash ……………………………………………………….
102,000
Record direct labor.
Factory Overhead ………………………………………….
24,000
Work in Process Inventory …………………………….
177,000
e.
Finished Goods Inventory ……………………………..
355,100
Work in Process Inventory ……………………….
355,100
f.
Accounts Receivable …………………………………….
525,000
Sales ……………………………………………………….
525,000
Record sales on account.
g.
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 …..
68,000
Accum. Depreciation—Factory Equipment .
36,500
Prepaid Insurance ……………………………………
10,000
Property Taxes Payable …………………………..
35,000
Record other factory overhead.
i.
Work in Process Inventory …………………………….
Factory Overhead …………………………………….
27,000
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
973
Problem 15-4A (Continued)
Part 3
GENERAL LEDGER ACCOUNTS
Raw Materials Inventory
(a)
200,000
(b)
128,000
(b)
19,500
Bal.
52,500
128,000
(e)
355,100
(d)
(c)
102,000
(c)
(i)
Bal.
Finished Goods Inventory
Cost of Goods Sold
(e)
355,100
(g)
215,700
(g)
215,700
Bal.
139,400
Bal.
215,700
Part 4
Total Job Costs*
(a) Work in Process Inventory
Job 137 ……………………………..
$ 63,500
Job 140 ……………………………..
15,400
Balance …………………………..…
Job 139 ……………………………..
$139,400
(c) Cost of Goods Sold
Job 136 ……………………………..
$ 84,000
Job 138 ……………………………..
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 15
974
Problem 15-5A (35 minutes)
Part 1
a. Predetermined overhead rate
b. Overhead costs applied to jobs
Direct
Applied
Job No.
Labor
Overhead (60%)
201 …………
$ 604,000
$ 362,400
202 …………
203 …………
204 …………
205 …………
206 …………
c. Overapplied or underapplied overhead
Actual overhead cost ………..
$1,520,000
Part 2
Dec. 31
Cost of Goods Sold …………………………………….
12,800
Factory Overhead …………………………………..
12,800
Close underapplied overhead.