E 4-50
1.
Credit
a. Raw Materials
Accounts Payable 29,670 Mat req=> 24,500
24,500
32,400
17,880
Various Payables
17,880 Job 58
Job 59
e. Work in Process Job 60
Overhead Control 8,640
Total Direct Labor Hours = $32,400/$18 = 1,800 DLH 32,400 / 18 = 1,800
Applied Overhead = 1,800 DLH × $4.80 = $8,640 1,800 × 4.80 = 8,640
f. Finished Goods 27,440 + 22,580 = 50,020
Work in Process 50,020
Cost of Goods Sold
74,256
53,040
2. Job 58 Job 59 Job 60 Job 58 Job 59 Job 60
Direct materials…………………………………………………………………………………………………………………………………………….
$ 9,200 $ 8,900 $ 6,400 rates ↓ 9,200 8,900 6,400
Direct labor………………………………………………………………………………………………………………………………..………………………….
14,400 10,800 7,200 18 × 800 600 400
Applied overhead………………………………………………………………………………………………………………………….……………………..
3,840 2,880 1,920 4.80 × 800 600 400
Total cost…………………………………………………………………………………………………………………………..……………………….
$27,440 $22,580 $15,520
3. Raw Materials:
Beginning balance…………………………………………………………………………………………………………………………...…………………
Direct materials………………………………………………………………………………………………………………………..…………………………….
Ending balance………………………………………………………………………………………………………………………………..……………….
Journal
Account & Explanation
Date
Debit
29,670
8,640
50,020
E 4-50 (Concluded)
4. Work in Process:
Beginning balance……………………………………………………………………….…………….
$ 0 0
Direct materials…………………………………………………………………………………………
24,500 24,500
Direct labor……………………………………………………………………….………………
32,400
Applied overhead………………………………………………………………………………………
Job 58………………………………………………………………………………………
Job 59……………………………………………..………………………………………………
Ending balance…………………………………………………………………………………
$ 15,520
5. Finished Goods:
Beginning balance………………………………………………………………….………….
$ 25,600 25,600
Jobs transferred in:
Job 58……………………………………………….…………………………………………
$27,440 27,440
Job 59……………………………………………………….…………………………………………………
22,580 50,020 22,580
Jobs sold:
Job 57………………………………………………………….……………………………………
$25,600 25,600
Job 58……………………………………………….………………………………………
27,440 (53,040) 27,440
Ending balance…………………………………………………….……………………………………
$ 22,580
E 4-51
1. Allocation ratios for Power based on number of machine hours:
2.
General Small
Power Factory Battery Motors
Direct costs……………………………………………………………………………………………………………………………………………..
$ 160,000 $ 430,000 $163,000 $ 84,600 160,000 × 0.8750 = 140,000
Allocate: 160,000 × 0.1250 = 20,000
Power…………………………………………………………………………………………………………………………………………..
(160,000) —140,000 20,000 430,000 × 0.2500 = 107,500
General Factory…………………………………………………………………………………………………………………………………………..
—(430,000) 107,500 322,500 430,000 × 0.7500 = 322,500
Total…………………………………………………………………………………………………………………………………………..
$ 0 $ 0 $410,500 $427,100
Operating Divisions
Support Departments
E 4-52
1. Allocation ratios for General Factory based on square footage: (change here first, please)
Power = 1,000/(1,000 + 5,000 + 15,000) = 0.0476 1,000 /1,000 + 5,000 + 15,000 = 0.0476
Battery = 5,000/(1,000 + 5,000 + 15,000) = 0.2381 5,000 /1,000 + 5,000 + 15,000 = 0.2381
2. Support Departments Power HR Battery SM
General Small 160,000 430,000 163,000 84,600
Power Factory Battery Motors
Direct costs…………………………..
$ 160,000 $163,000 $84,600 430,000 × 0.0476 = 20,468 Note: need to round ratios to 4 digits
Allocate: 430,000 × 0.2381 = 102,383
Power…………………………………..
20,468 (430,000) 102,383 307,149 430,000 × 0.7143 = 307,149
General Factory*…………………………………
(180,468) —157,910 22,559 180,468 × 0.8750 = 157,910
Total…………………………….
$ 0 $ 0 $423,293 $414,308 180,468 × 0.1250 = 22,559
$430,000
Operating Divisions
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-53
1. Overhead Rate = $789,000/100,000 DLH = $7.89 per DLH 789,000 / 100,000 = 7.89
2. Job 741 Job 743 Job 744 Job 745 Job 741 Job 742 Job 743 Job 744 Job 745
Balance, July 1………………………………………………
$ 29,870 $27,880 $ 0 $ 0 29,870 55,215 27,880 0 0
Direct materials…………………………………………
25,500 14,450 13,600 8,420 25,500 39,800 14,450 13,600 8,420
Direct labor…………………………………………
61,300 28,700 24,500 21,300 61,300 48,500 28,700 24,500 21,300
Applied overhead…………………………………………
31,560 15,622 12,624 11,046 4,000 3,400 1,980 1,600 1,400
Total cost………………………………………………………………………………………………………………………………
$148,230 $86,652 $50,724 $40,766
P 4-54
1. Cost of Alban job:
Professional time (85 hours × $120)……………………………………………………………………………………………………………………………………..
$10,200 37 + 48 × 120 = 10,200
Mileage (510 miles @ $0.50)………………………………………………………………………………………………………………………………
255 510
@
0.50 = 255
Photographs………………………………………………………………………………………………………………………………
120 120
Total………………………………………………………………………………………………………………………………
$10,575
PROBLEMS
Job 742
$ 55,215
39,800
48,500
26,826
$170,341
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-54 (Concluded)
3. Answers may vary. The following is one example. change blue here only, please
(items in green are links)
Beginning Ending Total Total
Date Client Mileage Mileage Miles Beg. Mileage Miles
7/8 Alban 56,780 56,815 Ofc. to claimant #1, 35 56,780 + 35 = 56,815
to Dr. Phony, to
claimant #2, to ofc.
7/9 Alban 56,815 56,903 Ofc. to claimant #3, 88 56,815 + 88 = 56,903
to claimant #4, to ofc.
Rex Spade Mileage Log
Destination
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-55
1. Overhead Rate = $374/$440 = 0.8500 times direct labor cost 374 /440 = 0.8500
(This rate was calculated using information from the Carter job; however, the
Pelham and Tillson jobs would give the same answer.)
2. Carter Pelham Tillson Jasper Dashell Carter Pelham Tillson Jasper Dashell
Beginning WIP……………………………………………………………………………………...
$1,024 $1,910 $3,621 $ 0 $ 0 1,024 1,910 3,621 0 0
Direct materials……………………………………………………………………………………
600 550 770 2,310 190 600 550 770 2,310 190
Direct labor……………………………………………………………………………………
Applied overhead……………………………………………………………………………………
3. Since the Tillson and Jasper jobs were completed, the others must still be in
process. Therefore, the ending balance in Work in Process is the sum of the costs
of the Carter, Pelham, and Dashell jobs.
Carter…………………………………………………………………………………………………………..
$2,179 Carter Pelham Dashell
Pelham…………………………………………………………………………………………………………..
2,830 2,179 2,830 634
Dashell…………………………………………………………………………………………………………..
634
Ending work in process……………………………………………………………………………..
$5,643
Cost of Goods Sold = Tillson Job + Jasper Job = $4,835 + $6,195 = $11,030 Tillson Jasper
4,835 + 6,195 = 11,030
4.
Sales (1.30 × $11,030)……………………………………………………………………………..………………………..……………………………….
Cost of goods sold……………………………………………………………………………………………………………
Marketing and administrative expenses………………………………………………………………………………….
Operating income………………………………………………………………………………………………………….
Sales ↓
Pavlovich Prosthetics Company
Income Statement
For the Month Ended January 31
CHAPTER 4 Job-Order Costing and Overhead Application
Complete here first, please:
P 4-56 Dept A Dept B Dept A Dept B
1. OH Rate = $108,000/18,000 mhrs = $6.00 per machine hour 75,000 33,000 10,000 8,000 = 6.00
2. Department A: $75,000/10,000 mhrs = $7.500 per machine hour 75,000 / 10,000 = 7.500 20 50
Department B: $33,000/8,000 mhrs = $4.125 per machine hour 33,000 / 8,000 = 4.125 50 20
Job 73
Job 74
Job 74
Job 73
Department A appears to be more overhead intensive, so jobs spending more
time in Department A ought to receive more overhead. Thus, departmental rates
provide more accuracy.
Overhead (expected)…………………………..
60,000
4. Plantwide rate: $135,000/18,000 mhrs = $7.50 75,000 + 60,000 / 18,000 = 7.50 7.50
Department B: $60,000/8,000 mhrs = $7.50 60,000 / 8,000 = 7.50 7.50
Plantwide: Plantwide: 20 + 50 = 70 50 + 20 = 70
70 mhrs × $7.50 = $525
70 mhrs × $7.50 = $525
70 × 7.50 = 525 70 × 7.50 = 525
Job 73
← Job 73
← Job 74
Job 74
Machine Hours
Job 73
Job 74
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-57
1. Overhead Rate = $432,000/8,000 mhrs = $54.00 per machine hour Links: 432,000 /8,000 = 54.00
Job 1 Job 2 Job 1 Job 2 Job 1 Job 2
Direct materials…………………………………………….……………………………
Direct labor……………………………………………….………………………………
Plus 35% markup………………………………………………………..……………………..………
2. Welding Overhead Rate = $220,000/5,000 mhrs = $44.00 per machine hour 220,000 /5,000 = 44.00
Assembly Overhead Rate = $62,000/10,000 dlhrs = $6.20 direct labor hour 62,000 /10,000 = 6.20
Finishing Overhead Rate = $150,000/2,000 mhrs = $75.00 per machine hour 150,000 /2,000 = 75.00
Job 1 Job 2 Job 1 Job 2
Direct materials………………………………………………………………………
$ 6,725 $ 9,340 6,725 9,340
Direct labor………………………………………………………..……………………
1,800 3,100 1,800 3,100
Total manufacturing cost……………………………………………….………………………..
Plus 35% markup………………………………………………………..……………………..………
Complete here first, please:
Welding Assembly Finishing Totals
220,000 62,000 150,000 432,000
4,500 10,000 6,000 20,500
90,000 150,000 120,000 360,000
5,000 1,000 2,000 8,000
Machine Hours
Please complete below first (Welding, Assembly, & Finishing)
P 4-58
1. Jan’s Job Ed’s Job Jan’s Job Ed’s Job Rate Overhead
Materials……………………………………………….………………………………………
$ 50 $75 50 75 620%
Direct labor ($6 × 10 hours; $6 × 20 hours)……………………………………………..……………………………..
60 120 10 20
Applied overhead:
0.20 × ($50 + $60)…………………………………………...…………………………………………………………….……….………..
22 20% × 50 + 60 = 22
0.20 × ($75 + $120)………………………………………………………………………………………………………….……….………..
39 20% × 75 + 120 = 39
Total………………………………………………………………………………….
$132 $234
2. Since Jan’s job is more like the jobs Steve is used to doing, her costs are likely
P 4-59
1. Job 64: Job 64 Job 65 Rate Overhead
Direct materials…………………………………………….………………………………………
50 80 11 20%
Direct labor…………………………………………….………………………………………
50 —
Overhead ($11 × 410 DLH)………………………………………………….…………………………………………………….………………………………………
3,560 785
Total cost…………………………………………….………………………………………
410 583
Unit Cost = $14,790/50 units = $295.80 14,790 / 50 = 295.80
2. Ending Work in Process
= Cost of Job 65
= $785 + $9,328 + ($11 × 583 DLH) = $16,526 785 + 9,328 + 11 × 583 = 16,526
3.
Labor 6,720
Finished Goods
Work in Process
14,790
Finished Goods
Sales Revenue
(1.75 × $14,790) = $25,883
14,790
25,883
Date
Journal
Credit
Account & Explanation
Debit
14,790
$ 3,560
6,720
4,510
$14,790
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-60
1. Job 518 Job 519 Totals Rate Overhead
Debit 4,610
a. Raw Materials 4,610 3,170 1,630 4,800 14 6.2
Accounts Payable 4,610 65 90 155
14 973
b. Work in Process 4,800 6.20 Overhead control ↑
Raw Materials 4,800
Cash 973
2.
Direct materials…………………………………………….………………………………………
$3,170
Direct materials…………………………………………….………………………………………
$1,630
Direct labor…………………………………………….………………………………………
910
Direct labor…………………………………………….………………………………………
1,260
Applied overhead………………………………………….………………………………………
403
Applied overhead………………………………………….………………………………………
558
Total………………………………………….………………………………………
$4,483
Total………………………………………….………………………………………
$3,448
Debit (link)
f. Finished Goods 4,483 4,483
Work in Process 4,483
Date
Account & Explanation
Credit
Journal
Date
Account & Explanation
Credit
Job 518
Job 519
Journal
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-60 (Concluded)
3.
Direct materials:
Beginning raw materials inventory………………………………………….…………………………………………………………………
$1,025 1,025
Purchases of raw materials………………………………………………………………………………………………………………….
4,610 4,610 ← link
Total raw materials available…………………………………………………..……………………………………………………………..
$5,635
Ending raw materials……………………………………………….………………………………………………………………………….
835
Raw materials used…………………………………….……………………………………………………………………………
$4,800 4,800 ← link
Direct labor…………………………………..………………………………………………………………………………………………
2,170 2,170 ← link
Less: Underapplied overhead…………………………….……………………………………………………
Overhead applied…………………………………………………………………………………………………
Current manufacturing costs…………………………………………………………………………………………………………………….
Add: Beginning work in process…………………………………..…………………………………..………………………………
Total manufacturing costs…………………………………..……………………………………………………………………………..
Less: Ending work in process………………………………………..……………………………………………………………………….
Cost of goods manufactured……………………………………….………………………………………………………………………..
P 4-61
1. = Direct Labor Cost × Overhead Rate
= $80,000 × Overhead Rate 140,000 = 80,000 × ?
= 1.75, or 175% of Direct Labor Cost ? = 140,000 = 80,000 = 1.75
2.
Applied overhead………………………………..………………………………………………..………………………………………………..………………
$140,000 140,000
Actual overhead………………………………..………………………………………………..………………………………………………..………………
138,500 138,500
Overapplied overhead………………………………..………………………………………………..………………
$ 1,500
Direct materials……………………………………………………………………………………
Direct labor………………………………………………………………….…………………………
Overhead applied……………………………………………………………………………………
Add: Beginning work in process……………………………………………..……………………………………
Less: Ending work in process…………………………………………………………………..………………………………………
Cost of goods manufactured………………………………………………………………..
Nelson Company
Schedule of Cost of Goods Manufactured
For the Month Ended April 30
Overhead Rate
$140,000
Applied Overhead
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-61 (Concluded)
4.
Debit
Overhead Control 1,500 1,500 245,000
Cost of Goods Sold 1,500
5.
Direct labor (1,000 × $10)………………………………………………………………………………………………………………………………………..
$10,000 1,000 × 10 = 10,000
Overhead applied (1.75 × 10,000)………………………………………………………………………….……………..…………………………………………….…………
17,500 175% × 10,000 = 17,500
Direct materials ($32,000 – $10,000 – $17,500)……..……………………………….……………
4,500 32,000 – 10,000 – 17,500 = 4,500
Ending work in process…………………………………………………………………………..
$32,000
P 4-62
1. Overhead Rate = $129,600/13,500 DLH = $9.60 per direct labor hour 129,600 /13,500 = 9.60
Direct materials………………………………………………………………………………………
Direct labor……………………………………….………………………………………………………
Applied overhead*…………………………………………………………………………………………..
$11,129
3.
Debit
Overhead Control 172,500
Lease Payable 6,800 6,800
Accumulated Depreciation 19,340 19,340
Wages Payable 90,400 90,400
Utilities Payable 14,560 14,560
Other Payables 41,400 41,400
Work in Process ($9.60 × 18,100 DLH) 173,760 9.60 × 18,100 = 173,760
Overhead Control 173,760
Actual overhead……………………………………………………………………..………………………….
Applied overhead……………………………………..………………………………………………
Normal cost of goods sold……………………………………….……………………………….
Date
Account & Explanation
Credit
Journal
Date
Account & Explanation
Credit
Journal
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-63
1.
Debit Job 703 Job 704
a. Raw Materials 42,630 42,630 12,500 14,500
Accounts Payable 42,630 780 1,100
b. Work in Process 27,000
Raw Materials 27,000
2. Job 703:
Beginning balance, work in process……………………………………………………………………………………………………………………………………………
$10,000 10,000
Direct materials…………………………………………………………………………………………………………………………………………………
12,500 12,500
Direct labor ($14 × 780 DLH)……………………………………………………………………………………………………………...……………………………
10,920 14 × 780 = 10,920
Overhead applied ($10 × 780 DLH)……………………………………………………………………………………………………………………………………………
7,800 10 × 780 = 7,800
Total……………………………………………………………………………………………………………...……………………………
$41,220
Direct materials…………………………………………………………………………………………………………………………………………………
Direct labor ($14 × 1,100 DLH)……………………………………………………………………………………………………………………………………………
Overhead applied ($10 × 1,100 DLH)……………………………………………………………………………………………………………………………………………
Total……………………………………………………………………………………………………………...……………………………
$40,900
Journal
Date
Account & Explanation
Credit
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-63 (Concluded)
3.
Debit Credit
f. Finished Goods 41,220 41,220
Work in Process 41,220
4. a. Raw Materials:
Beginning balance……………………………………………………………………………………………………………..
$ 6,070 6,070
Add:
Purchases…………………………………………………………………………………………………………..
42,630 42,630
Less:
Materials requisitioned…………………………………………………………………………………………………………..
(27,000) 12,500 + 14,500 = 27,000
Ending balance…………………………………………………………………………………………………………..
Beginning balance……………………………………………………………………………………………………………..
Materials requisitioned…………………………………………………………………………………………………………..
Direct labor…………………………………………………………………………………………………………..
Overhead applied…………………………………………………………………………………………………………..
Jobs completed…………………………………………………………………………………………………………..
Ending balance…………………………………………………………………………………………………………..
c. Finished Goods:
Beginning balance……………………………………………………………………………………………………………..
$ 6,240
Add:
Jobs completed…………………………………………………………………………………………………………..
41,220
Less:
Jobs sold…………………………………………………………………………………………………………..
(6,240)
Ending balance…………………………………………………………………………………………………………..
$41,220
Journal
Date
Account & Explanation
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-64
1. Direct method:
Proportion of: Laboratory Pathology Delivery Accounting Laboratory Pathology
Number of samples…………………………………………………………………………………………………………..
0.6000 0.4000 240,000 270,000 345,000 456,000
Transactions processed…………………………………………………………………………………………………………..
0.6500 0.3500 — — 70,200 46,800
Direct costs…………………………………………………………………………………………………………..
(0.6000 × $240,000)…………………………………………………………………………………………………………..
(0.4000 × $240,000)…………………………………………………………………………………………………………..
(0.65 × $270,000)…………………………………………………………………………………………………………..
(0.35 × $270,000)…………………………………………………………………………………………………………..
2. Delivery Accounting Laboratory Pathology
Transactions…………………………………………………………………………………………………………..
0.0500 —0.6175 0.3325
Number of samples…………………………………………………………………………………………………………..
— — 0.6000 0.4000
Direct costs…………………………………………………………………………………………………………..
$ 240,000 $ 270,000 $345,000 $456,000
(0.0500 × $270,000)…………………………………………………………………………………………………………..
(0.6175 × $270,000)…………………………………………………………………………………………………………..
(0.3325 × $270,000)…………………………………………………………………………………………………………..
(0.6000 × $253,500)…………………………………………………………………………………………………………..
(0.4000 × $253,500)…………………………………………………………………………………………………………..
P 4-65
1. a. Direct method: Maintenance Power Drilling Assembly
Drilling Assembly 320,000 400,000 163,000 90,000
Machine hours…………………………………………………………………………………………………………..
0.8000 0.2000 —22,500 30,000 7,500
Kilowatt-hours…………………………………………………………………………………………………………..
0.1000 0.9000 40,000 —36,000 324,000
Maintenance: — — 5,000 40,000
(0.80 × $320,000)…………………………………………………………………………………………………………..
$256,000 0.8000 × 320,000 = 256,000
(0.20 × $320,000)…………………………………………………………………………………………………………..
$ 64,000 0.2000 × 320,000 = 64,000
(0.10 × $400,000)…………………………………………………………………………………………………………..
(0.90 × $400,000)…………………………………………………………………………………………………………..
Direct costs…………………………………………………………………………………………………………..
Producing Departments
Support Departments
CHAPTER 4 Job-Order Costing and Overhead Application
P 4-65 (Concluded)
Drilling: $459,000/30,000 mhrs = $15.30 per machine hour 459,000 / 30,000 = 15.30
Assembly: $514,000/40,000 DLH = $12.85 per direct labor hour 514,000 / 40,000 = 12.85
Prime costs………………………………………………………………………………………………………..
$1,817.00 1,817.00
Drilling ($15.30 × 2 mhrs)………………………………………………………………………………………………………..
30.60 15.30 × 2 = 30.60
Assembly ($12.85 × 50 DLH)………………………………………………………………………………………………………..
642.50 12.85 × 50 = 642.50
Total cost………………………………………………………………………………………………………..
$2,490.10
Markup (15%)………………………………………………………………………………………………………..
373.52 2,490.10 × 15% = 373.52
Bid price………………………………………………………………………………………………………..
$2,863.62
Machine hours……………………………………………………………………………………………………
Direct costs……………………………………………………………………………………………………
(0.10 × $400,000)……………………………………………………………………………………………………
(0.09 × $400,000)……………………………………………………………………………………………………
(0.81 × $400,000)……………………………………………………………………………………………………
Maintenance:
(0.80 × $360,000)……………………………………………………………………………………………………
(288,000) —288,000 0.8000 × 360,000 = 288,000
(0.20 × $360,000)……………………………………………………………………………………………………
(72,000) 72,000 0.2000 × 360,000 = 72,000
Total………………………………………………………………………………………………
$ 0 $ 0 $487,000 $486,000
Drilling: $487,000/30,000 mhrs = $16.23 per machine hour 487,000 / 30,000 = 16.23
Assembly: $486,000/40,000 DLH = $12.15 per direct labor hour 486,000 / 40,000 = 12.15
Prime costs………………………………………………………………………………………………………..
Drilling ($16.23 × 2 mhrs)………………………………………………………………………………………………………..
Assembly ($12.15 × 50 DLH)………………………………………………………………………………………………………..
Total cost………………………………………………………………………………………………………..
Markup (15%)………………………………………………………………………………………………………..
Bid price………………………………………………………………………………………………………..
$2,825.50
CHAPTER 4 Job-Order Costing and Overhead Application
Case 4-66
1. Mrs. Lucky won’t like being charged more for one job when the same number
and type of announcements were produced in each job.
3. Predetermined Rate = $240,000/(500 hours × 12) = $40 per hour 240,000 / 500 × 12 = 40
Cost and price of each job:
Direct materials………………………………………………………………………………………………………………………………..
250.00
Direct labor……………………………………………………………………………………………………………………………..
Overhead (5 hours × $40)………………………………………………………………………………………………………………………..
Plus 25% markup………………………………………………………………………………………………………………………..
$475.00
CASES
$250.00
CHAPTER 4 Job-Order Costing and Overhead Application
Case 4-67
1. The solution Doug proposes is not ethical. Although maintaining the current
plantwide rate is probably not illegal, its continuation has one purpose: to extract
extra profits from government business. Doug knows the plantwide rate is not
accurately assigning overhead costs to the various jobs and is willing to alter the
assignments on an “unofficial basis” for purposes of bidding on private-sector
jobs. Fundamentally, ethical behavior is concerned with choosing right over
2. Tonya should first determine whether or not Gunderson has a corporate code of
conduct. She can pursue the avenues suggested by the code. For example, if
Tonya cannot persuade Doug to refrain from implementing his scheme, she