1150
Problem 19-5B (Continued)
GENERAL JOURNAL
a.
Raw Materials Inventory …………………………………………
41,200
Accounts Payable …………………………………………….
41,200
Record materials purchases ($30,000+$11,200).
d.
72,000
Factory Overhead ………………………………………………….
12,000
Cash ………………………………………………………………..
84,000
*($40,000 + $32,000)
Factory Overhead ………………………………………………….
36,800
Cash ………………………………………………………………..
36,800
Record other factory overhead.
e.
Finished Goods Inventory ……………………………………..
93,600
Work in Process Inventory ……………………………….
93,600
Record completion of jobs.
Accounts Receivable ……………………………………………..
Sales ………………………………………………………………..
Record sales on account.
93,600
Finished Goods Inventory ………………………………..
93,600
Record cost of sales.
38,400
Factory Overhead ………………………………………………….
Raw Materials Inventory ……………………………………
39,264
*($16,000 + $8,000 + $9,600 + $4,800)
i.
Work in Process Inventory …………………………………….
50,400
Factory Overhead …………………………………………….
50,400
Apply overhead ($28,000 + $22,400).
1151
Problem 19-5B (Continued)
j. The ending balance in Factory Overhead is computed as:
Actual Factory Overhead
Miscellaneous overhead …………..
Indirect labor …………………………...
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
1152
SERIAL PROBLEM— SP 19
Serial Problem—SP 19, Business Solutions (40 minutes)
1. The cost of direct materials requisitioned in the month equals the total
direct materials costs accumulated on the three jobs less the amount of
direct materials cost assigned to Job 602 in May:
2. Direct labor cost incurred in the month equals the total direct labor
costs accumulated on the three jobs less the amount of direct labor cost
assigned to Job 602 in May:
3. The predetermined overhead rate equals the ratio between the amount
of overhead assigned to the jobs divided by the amount of direct labor
cost assigned to them. Since the rate is assumed constant during the
year in this problem, and the same rate is used for all jobs within a
month, the ratio for any one of them equals the rate that was applied.
This table shows the ratio for jobs 602 and 604:
Job 602
Job 604
Overhead ……………………………………………………..
Predetermined overhead rate ………………………..
4. The cost transferred to finished goods in June equals the total costs of
the two completed jobs for the month, which are Jobs 602 and 603:
Job 602
Job 603
Total
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
1153
Reporting in Action — BTN 19-1
1. Actual inventory changes and operating cash flow effects as found on
the cash flow statement (amounts are in $millions)
Apple
Current Year
One Year
Prior
Two Years
Prior
2. A successful JIT system should reduce inventory levels. This reduction
in inventory should increase operating cash flows. In the solution of
part 1, notice that decreases in inventory yield increases in operating
3. This is a one-time occurrence of a release of cash. However, this one–
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
1154
Comparative Analysis — BTN 19-2
1.
Apple ($millions)
Current Year
One Year
Prior
Two Years
Prior
2.
Google ($millions)
Current Year
One Year
Prior
Two Years
Prior
3. For both Apple and Google, gross margin ratios increased in the current
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
1155
Ethics Challenge — BTN 19-3
Instructor note: This problem is designed to illustrate why the accounting professional
must be aware of management’s and employees’ biases when working with and relying
on accounting estimates and data.
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Suggested content outline
The obvious concern is that management is allocating more overhead to
government jobs compared to open market bid contracts. There is no
obvious reason for such behavior other than a profit motive.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
Communicating in Practice — BTN 19-4
Student notes should include but not be limited to the following points:
1. You recommend replacing the general accounting (periodic inventory)
system with a cost accounting (perpetual inventory) system—
specifically a job order cost accounting system. Cost accounting
2. This new system would require use of many different documents to
control the acquisition, use, and availability of materials. It also requires
3. The focal point of the new system is the job cost sheet, which is used to
accumulate and tally costs of goods as produced for each specific job
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
Taking It to the Net — BTN 19-5
Instructor note: There is no single solution to this assignment.
The Website [amsi.com] provides details about what its job costing
software can provide to users. After careful examination, students can
write a report to the CEO, which may include the following points:
Teamwork in Action — BTN 19-6
1. A medical clinic can be considered as appropriate for a job order cost
accounting system. This is because each patient is unique in many
2. In light of the differences identified in part 1, the doctors will consider
the individual characteristics of every patient in determining the type
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
Entrepreneurial Decision — BTN 19-7
1. A job cost sheet for a service company would likely not contain many
costs for direct materials. Often, service providers simply include
2. Examples of direct labor and overhead costs for Neha Assar include:
Hitting the Road — BTN 19-8
1. The framework for the job cost sheet should follow that in the third
exhibit in the chapter. This includes the descriptions for: company
2. Results of the comparison of job cost sheets to a builder’s actual job
cost sheets depend on the builder chosen and the format used.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 19
Global Decision — BTN 19-9
1. Actual inventory amounts and changes. Apple’s amounts are in $millions
and Samsung’s amounts are in millions of Korean won.
Apple ($millions)
Balance,
Current Year
Balance,
Prior Year
Change in
Inventory
flow effect from
Balance,
Current Year
Balance,
Prior Year
Change in
Inventory
2. A successful JIT system should reduce inventory levels. This reduction
in inventory should increase operating cash flows. In the solution of
part 1, notice that increases in inventory yield decreases in operating
3. We cannot definitively determine which company of the two would
benefit the most from JIT implementation. The benefit of JIT would
depend on the efficiencies gained from the implementation, which