CHAPTER 2
SOLUTIONS TO EXERCISES—SET B
EXERCISE 2-1B
(a) Factory Labor ……………………………………………………. 77,000
Factory Wages Payable ……………………………….. 61,000
Employer Payroll Taxes Payable ………………….. 9,600
EXERCISE 2-2B
(a) May 31 Work in Process Inventory ………………….. 10,500
Manufacturing Overhead …………………….. 1,800
Raw Materials Inventory…………………. 12,300
31 Work in Process Inventory ………………….. 12,800
Manufacturing Overhead …………………….. 1,950
Factory Labor ……………………………….. 14,750
(b)
Work in Process Inventory
May 31 Balance 28,280
May 1 Balance 3,200
31 10,500
May 31 8,460
EXERCISE 2-2B (Continued)
Job Cost Sheets
Job
No.
Beginning Work
in Process
Direct
Material
Direct
Labor
Manufacturing*
Overhead
Total
430
$1,200
$3,600
$ 3,000
$2,400
$10,200
EXERCISE 2-3B
(a) 1. $14,305, or ($4,105 + $6,000 + $4,200).
(b) Jan. 31 Work in Process Inventory ………………….. 8,000
Raw Materials Inventory
($6,000 + $2,000) ……………………….. 8,000
EXERCISE 2-4B
(a) + $50,000 + $37,500 = $135,650
(a) = $48,150
EXERCISE 2-4B (Continued)
[Note: The instructions indicate that manufacturing overhead is applied on the
basis of direct labor cost, and the rate is the same in all cases. From Case A,
a student should note the overhead rate to be 75%, or ($37,500 ÷ $50,000).]
(d) = .75 X $120,000
(d) = $90,000
[Note: (h) and (i) are solved together.]
(i) = .75(h)
$72,600 + (h) + .75(h) = $212,600
1.75(h) = $140,000
EXERCISE 2-5B
(a) $2.56 per machine hour ($320,000 ÷ 125,000).
EXERCISE 2-6B
(a) (1) The source documents are:
Direct materials—Materials requisition slips.
Direct labor—Time tickets.
Manufacturing overhead—Predetermined overhead rate.
(3) The total cost is:
Direct materials …………………………………………………… $4,965
EXERCISE 2-7B
1. Raw Materials Inventory ………………………………………… 45,235
Accounts Payable ………………………………………….. 45,235
EXERCISE 2-7B (Continued)
5. Manufacturing Overhead ………………………………… 80,500
Accounts Payable ……………………………………. 80,500
6. Work in Process Inventory ($49,000 X 120%) ……. 58,800
Manufacturing Overhead………………………….. 58,800
EXERCISE 2-8B
1. Raw Materials Inventory …………………………………. 213,000
Accounts Payable ……………………………………. 213,000
Factory Labor ………………………………………………… 92,000
Factory Wages Payable ……………………………. 92,000
EXERCISE 2-8B (Continued)
5. Work in Process Inventory ……………………………… 59,150
Manufacturing Overhead
(70% X $84,500) …………………………………… 59,150
Computation of cost of jobs finished:
Job
Direct
Materials
Direct
Labor
Manufacturing
Overhead
Total
A20
$33,240
$18,500
$12,950
$ 64,690
EXERCISE 2-9B
(a) ANDRES MANUFACTURING COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2017
Work in process, May 1 …………………………………. $ 18,800
Direct materials used …………………………………….. $54,200
Direct labor …………………………………………………… 32,000
EXERCISE 2-9B (Continued)
(b) ANDRES MANUFACTURING COMPANY
(Partial) Income Statement
For the Month Ended May 31, 2017
Sales…………………………………………………………. $200,000
Cost of goods sold
Finished goods, May 1 ………………………… $ 12,600
Cost of goods manufactured ……………….. 127,100
(c) In the May 31 balance sheet, the manufacturing inventories will be reported in
EXERCISE 2-10B
(a) Work in Process Inventory
April 30 $11,300 (#10, $7,200 + #11, $4,100)
(b) Finished Goods Inventory
April 30 $1,200 (#12)
(c) Gross Profit
Month
Job
Number
Sales
Cost of
Goods Sold
Gross
Profit
May
12
$ 1,560
$ 1,200
$ 360
EXERCISE 2-11B
(a)
Transaction
Number
Accounts Titles
Debit
Credit
1
Supplies ……………………………………..
1,795
Accounts Payable …………………..
1,795
(b)
Work in Process
2.
700
68,000
6.
5.
Operating Overhead …………………….
Supplies …………………………………
3
Work in Process ………………………….
Operating Overhead …………………….
4
Operating Overhead …………………….
Cash ………………………………………
5
Work in Process ($41,250 X 80%) …
6
Cost of Completed Work ……………..
Work in Process ……………………..
EXERCISE 2-12B
(a)
Manson
Walker
Barton
Direct materials
$ 650
$ 350
$ 200
(b) The Barton job is the only incomplete job, therefore, $5,375.
(c) Applied overhead
$ 10,500 (CR)
Actual overhead
Balance
$ 500 (CR)
EXERCISE 2-13B
(a) Predetermined overhead rate = Budgeted overhead ÷ Budgeted
decorator hours
(b) Applied overhead
Work in Process (52,000 hrs X $17) …………….
884,000
Operating Overhead ………………………
884,000
(c)
Applied overhead
$ 884,000
Actual overhead
Balance
$ 5,000
overapplied
Auditor labor costs
Applied overhead
Total cost
SOLUTIONS TO PROBLEMS—SET C
PROBLEM 2-1C
(a) $450,000 ÷ 20,000 direct labor hours = $22.50 per direct labor hour
(b) See solution to part (e) for job cost sheets
(c) Raw Materials Inventory ……………………………………. 46,000
Accounts Payable ……………………………………… 46,000
(d) Work in Process Inventory ………………………………… 33,000
Raw Materials Inventory
($5,000 + $15,000 + $13,000) ……………………. 33,000
PROBLEM 2-1C (Continued)
(e) Job Cost Sheets
Job No. 25
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Beg.
Jan.
$10,000
5,000
$6,000
3,000
*$ 9,000*
* 4,500*
Job No. 26
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Jan.
Direct labor ……………………………………………………….…. 12,000
Manufacturing overhead ………………………………………. 18,000
Total cost …………………………………………………………………… $45,000
$15,000
$12,000
**$18,000**
Job No. 27
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Manufacturing overhead ………………………………………. 13,500
Total cost …………………………………………………………………… $37,500
PROBLEM 2-1C (Continued)
Finished Goods Inventory ………………………………. 82,500
Work in Process Inventory
($37,500 + $45,000) ………………………………. 82,500
(g)
Work in Process
Beginning balance
Direct materials
25,000
33,000
82,500
Cost of completed jobs 25 and 26
(h)
Manufacturing Overhead
Actual
40,500
Applied
37,350
3,150
The balance in the Manufacturing Overhead account is underapplied.
PROBLEM 2-2C
(a)
Work in Process Inventory
1/1 Balance (1) 113,000
Direct materials (2) 105,000
Direct labor (3) 141,000
Manufacturing overhead (4)
175,000
Completed work (5) (c) 347,000
12/31 Balance 187,000
(1)
Job 50
$ 65,000
(3)
Job 50
$ 37,000
(2)
Job 50
Job 51
$ 32,000
30,000
(4)
Job 50
Job 51
$ 45,000
50,000
(5) (a) Job 50
Beginning balance ………………………………………… $ 65,000
Direct materials …………………………………………….. 32,000
(b) Job 51
Beginning balance ………………………………………… $ 48,000
Direct materials …………………………………………….. 30,000
PROBLEM 2-2C (Continued)
Work in process balance ………………………………………… $187,000
Unfinished job No. 52 …………………………………………….. $187,000 (a)
(a) Current year’s cost
Direct materials ……………………… $ 43,000
Direct labor ……………………………. 64,000
(b) Actual overhead costs
Incurred on account ……………………………………….. $121,000
Indirect materials ……………………………………………. 12,000
Applied overhead costs
Job 50 ……………………………………………………………. $ 45,000
Job 51 ……………………………………………………………. 50,000
Actual overhead ……………………………………………………. $170,500
Manufacturing Overhead ……………………………………….. 4,500
Cost of Goods Sold ………………………………………… 4,500
(c) Sales (given) …………………………………………….. $500,000
Cost of goods sold
Add: Job 48 …………………………..………………… $ 87,000
Job 49 …………………………………………….. 65,000
PROBLEM 2-3C
(a)
(i) Raw Materials Inventory ……………………………………. 4,300
Accounts Payable ………………………………………. 4,300
(ii) Work in Process Inventory ………………………………… 5,500
Manufacturing Overhead …………………………………… 1,500
Raw Materials Inventory ……………………………… 7,000
(iii) Finished Goods Inventory …………………………………. 21,540
Work in Process Inventory ………………………….. 21,540
Job
Direct
Materials
Direct
Labor
Manufacturing
Overhead*
Total
Costs
Clark
$3,100
$2,500
$2,000
$ 7,600
*80% of direct labor amount
Cash ………………………………………………………………… 45,000
Sales Revenue (3 X $15,000) ……………………….. 45,000
PROBLEM 2-3C (Continued)
(b)
Work in Process Inventory
5/1 Balance 13,080
Direct materials 5,500
5/31 Completed work 21,540
(c) Work in Process Inventory ……………………………………………….. $7,120
(d) VICTOR RAMOS COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2017
Work in process, May 1 ……………………………………. $13,080
Direct materials used ……………………………………….. $5,500
Direct labor ……………………………………………………… 5,600
Overhead applied 4,480
PROBLEM 2-4C
(a) Department A: $825,000 ÷ $550,000 = 150% of direct labor cost.
(b)
Department
Manufacturing Costs
A
B
C
Total
Direct materials
Direct labor
$ 92,000
52,000
$ 98,000
35,000
$ 64,000
50,400
(c)
Department
Manufacturing Overhead
A
B
C
Under (over) applied
Incurred
$ 76,000
$55,000
$92,000
PROBLEM 2-5C
(a) $89,000 ($78,000 + $11,000).
(b) $20,500 [($17,000 + $92,500) – $89,000 (See (a))].
(h) $153,000 (Given in other data).
(i) $336,700 (Same as (f)).