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CHAPTER 19
SOLUTIONS TO EXERCISES—SET B
EXERCISE 19-1B
(a) Factory utilities ....................................................................... $ 18,600
Depreciation on factory equipment ....................................... 14,445
Indirect factory labor .............................................................. 48,900
(b) Direct materials ....................................................................... $137,600
Direct labor .............................................................................. 98,100
(c) Depreciation on delivery trucks ............................................. $ 9,600
EXERCISE 19-2B
(a) Delivery service (product) costs:
Indirect materials ............................................................
$ 8,775
Depreciation on delivery equipment .............................
11,200
EXERCISE 19-2B (Continued)
(b) Period costs:
Property taxes on office building ..................................
$ 3,625
CEO’s salary ...................................................................
22,000
EXERCISE 19-3B
(a) Work-in-process, 1/1 ............................... $ 17,500
Direct materials used .............................. $135,000
Direct labor .............................................. 110,000
(b) Finished goods, 1/1 ................................. $ 60,500
EXERCISE 19-4B
Total raw materials available for use:
Raw materials inventory (1/1):
Direct materials used ........................................................ $190,000
EXERCISE 19-4B (Continued)
Total cost of work in process:
Total manufacturing costs:
Total cost of work in process .............................................. $617,000
Direct labor:
Total manufacturing costs ................................................... $409,500
Less: Total overhead .......................................................... 119,000
EXERCISE 19-5B
A + $63,200 + $46,500 = $175,650 $256,030 – $11,000 = F
A = $65,950 F = $245,030
$175,650 + B = $221,500 $137,060 + G + $102,000 = $273,700
B = $45,850 G = $34,640
EXERCISE 19-5B (Continued)
Additional explanation to EXERCISE 19-5B solution:
Case A
(a) Total manufacturing costs ................................................... $175,650
Less: Manufacturing overhead ............................................ 46,500
Direct labor ................................................................. 63,200
Direct materials used ............................................................ $ 65,950
Case B
(d) Direct materials used ............................................................ $ 72,330
Direct labor ............................................................................ 86,500
Manufacturing overhead ...................................................... 81,600
Total manufacturing costs ................................................... $240,430
Case C
(g) Total manufacturing costs ................................................... $273,700
Less: Manufacturing overhead ........................................... 102,000
Direct materials used ................................................ 137,060
Direct labor ............................................................................ $ 34,640
EXERCISE 19-5B (Continued)
(h) Total cost of work in process ............................................... $335,000
Less: Total manufacturing costs ........................................ 273,700
Work in process (1/1/17) ....................................................... $ 61,300
EXERCISE 19-6B
(a) (a) $127,000 + $140,000 + $83,000 = $350,000
(b) $350,000 + $33,000 – $360,000 = $23,000
(c) $430,000 – ($211,000 + $123,000) = $96,000
(b) HEINTZ COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended December 31, 2017
Work in process, January 1 ................................ $ 33,000
Direct materials ................................................... $127,000
Direct labor .......................................................... 140,000
EXERCISE 19-7B
(a) TART CORPORATION
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2017
Work in process, June 1 ............................. $ 4,800
Direct materials used .................................. $25,000
Direct labor .................................................. 30,000
Manufacturing overhead
Indirect labor ....................................... $4,000
Factory manager’s salary ................... 4,500
(b) TART CORPORATION
Income Statement (Partial)
For the Month Ended June 30, 2017
Net sales ................................................................ $85,100
Cost of goods sold
Finished goods inventory, June 1 ................ $ 5,000
Cost of goods manufactured [from (a)] ......... 72,900
EXERCISE 19-8B
(a) PARE, ASH, AND TOCY
Schedule of Cost of Contract Services Provided
For the Month Ended August 31, 2017
Supplies used (direct materials) ..................................
$ 3,700
Salaries of professionals (direct labor) .......................
15,600
Service overhead:
Utilities for contract operations ..............................
$1,900
(b) The costs not included in the cost of contract services provided would all
be classified as period costs. As such, they would be reported on the
income statement under administrative expenses.
EXERCISE 19-9B
(a) Work-in-process, 1/1 .............................. $ 20,300
Direct materials
Materials inventory, 1/1 .................. $ 22,000
Materials purchased ....................... 170,000
(b) Sales revenue......................................... $875,000
Cost of goods sold
Finished goods, 1/1 ........................ $ 27,000
Cost of goods manufactured ........ 548,100
EXERCISE 19-9B (Continued)
(c) Current assets
Inventories
Finished goods ............................................... $29,000
(d) In a merchandising company’s income statement, the only difference would be
in the computation of cost of goods sold. Beginning and ending finished
EXERCISE 19-10B
(a) MARKUS MANUFACTURING
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2017
Work in process inventory, June 1 ............... $ 6,500
Direct materials
Raw materials inventory, June 1 ........... $10,000
Manufacturing overhead
Indirect labor .......................................... $7,500
Factory insurance .................................. 4,000
Machinery depreciation ......................... 5,000
Factory utilities ....................................... 3,100
EXERCISE 19-10B (Continued)
(b) MARKUS MANUFACTURING
(Partial) Balance Sheet
June 30, 2017
Current assets
Inventories
Finished goods ......................................... $ 6,000
Work in process ........................................ 13,000
Raw materials ............................................ 11,500 $30,500
EXERCISE 1-11B
(a) Raw Materials account: (5,200 – 4,650) X $8 = $4,400
Work in Process account: (4,550 X 10%) X $8 = $3,640
(b) To: Chief Accountant
From: Student
Subject: Statement Presentation of Accounts
Two accounts will appear in the income statement. Cost of Goods Sold
will be deducted from net sales in determining gross profit. Selling ex-
penses will be shown under operating expenses and will be deducted
SOLUTIONS TO PROBLEMS—SET C
(a)
Product Costs
Cost Item
Direct
Materials
Direct
Labor
Manufacturing
Overhead
Period
Costs
Maintenance costs on factory building
Factory manager’s salary
Advertising for helmets
Sales commissions
$20,000
$55,000
$ 1,550
4,000
$18,050
8,000
5,000
$13,700
(b) Total production costs
Direct materials $20,000
Direct labor 55,000
(a)
Product Costs
Cost Item
Direct
Materials
Direct
Labor
Manufacturing
Overhead
Period
Costs
Raw materials (1)
Wages for workers (2)
Rent on equipment
Indirect materials (3)
$65,000
$70,000
$ 1,500
10,875
(1) $26 X 2,500 = 65,000.
(2) $14 X 2 X 2,500 = $70,000.
(b) Total production costs
Direct materials $ 65,000
Direct labor 70,000
PROBLEM 19-3C
(a) Case A
A = $6,025 + $3,000 + $6,000 = $15,025
$15,025 + $1,000 – B = $14,600
B = $15,025 + $1,000 – $14,600 = $1,425
Case B
G + $3,800 + $5,000 = $16,000
G = $16,000 – $3,800 – $5,000 = $7,200
$16,000 + H – $2,000 = $20,000
H = $20,000 + $2,000 – $16,000 = $6,000
PROBLEM 19-3C (Continued)
(b) CASE A
Cost of Goods Manufactured Schedule
Work in process, beginning ................................ $ 1,000
Direct materials .................................................... $6,025
Direct labor ........................................................... 3,000
(c) CASE A
Income Statement
Sales revenue ....................................................... $22,500
Less: Sales discounts ......................................... 1,770
Net sales ............................................................... $20,730
Cost of goods sold
Finished goods inventory, beginning ......... $ 3,700
CASE A
(Partial) Balance Sheet
Current assets
Cash ............................................................... $ 4,200
Receivables (net) .......................................... 11,000
Inventories
Finished goods ..................................... $1,770
PROBLEM 19-4C
(a) FALCON MANUFACTURING COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended December 31, 2017
Work in process inventory,
January 1 ................................. $ 9,650
Direct materials
Raw materials inventory,
Less: Raw materials
inventory,
December 31 ............. 44,800
Direct materials used .......... $ 66,200
Direct labor .................................. 156,300
Manufacturing overhead
Plant manager’s salary ....... 42,000
Total manufacturing
overhead ................... 96,100
Total manufacturing costs ......... 318,600
PROBLEM 19-4C (Continued)
(b) FALCON MANUFACTURING COMPANY
(Partial) Income Statement
For the Year Ended December 31, 2017
Sales revenues
Sales revenue ............................................ $477,000
Less: Sales discounts .............................. 2,500
Net sales ..................................................... $474,500
Cost of goods sold
Finished goods inventory,
(c) FALCON MANUFACTURING COMPANY
(Partial) Balance Sheet
December 31, 2017
Assets
Current assets
Cash ............................................................ $ 33,500
Accounts receivable .................................. 27,000
Inventories
PROBLEM 19-5C
(a) FATHOM COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended August 31, 2017
Work in process, August 1 .................. $ 18,975
Direct materials
Raw materials inventory,
Less: Raw materials inventory,
August 31 ........................... 30,000
Direct materials used ................... $198,900
Direct labor ........................................... 160,000
Manufacturing overhead
Factory facility rent ...................... $ 60,000
Depreciation on factory
Total manufacturing
overhead ............................ 118,500
Total manufacturing costs .................. 477,400
Total cost of work in process ............. 496,375
PROBLEM 19-5C (Continued)
(b) FATHOM COMPANY
Income Statement
For the Month Ended August 31, 2017
Sales (revenue) ................................................... $675,000
Cost of goods sold
Finished goods inventory, August 1 ......... $ 40,000
Cost of goods manufactured ..................... 475,375
Gross profit......................................................... 207,425
Operating expenses
Advertising expense ................................... 75,000
Selling and administrative salaries ........... 70,000
Depreciation expense—sales
