5-16
Exercise 5.19
1. a. Materials ………………………………………………… 113,300
Accounts Payable ……………………………….. 113,300
b. Work in Process …………………………..………… 82,500
Overhead Control …………………………………… 8,800
Materials …………………………………………….. 91,300
5-17
Exercise 5.19 (Concluded)
2. After underapplied overhead is charged to cost of goods sold:
Overhead Control
8,800
73,700
18,750
46,200
0
3.
Work in Process
10,000
230,000
82,500
67,000
3,200
Exercise 5.20
1. Setup rate = $156,000/1,200 = $130 per setup
2. Job 15 Job 16 Job 17 Job 18 Job 19
Balance, March 1 …….. $34,500 $39,890 $24,090 $ 0 $ 0
Direct materials ……….. 28,000 37,900 25,350 11,000 13,560
Direct labor ……………… 10,000 8,500 23,000 12,900 8,000
Applied overhead:
3. Ending balance in Work in Process = Job 18 + Job 19
5-18
CPA-TYPE EXERCISES
Exercise 5.21
c.
March 1, balance $ 12,000
Direct materials 50,000
Exercise 5.22
d.
Overhead rate =( $120,000 + $200,000)/80,000 = $4 per direct labor hour
Exercise 5.23
Exercise 5.24
a.
Purchasing and receiving rate = $60,000/(500 + 2,000) = $24/purchase order
Exercise 5.25
c.
5-19
PROBLEMS
Problem 5.26
1. a. Materials ………………………………………………… 60,100
Accounts Payable ……………………………….. 60,100
b. Work in Process ……………………………………… 50,000
Overhead Control …………………………………… 8,800
Materials …………………………………………….. 58,800
c. Work in Process ……………………………………… 75,000
Overhead Control …………………………………… 36,000
Wages Payable ……………………………………. 158,000
d. Overhead Control …………………………………… 10,400
Accumulated Depreciation …………………… 10,400
e. Overhead Control …………………………………… 1,450
Property Taxes Payable ………………………. 1,450
i. Administrative Expense ………………………….. 800
Selling Expense ……………………………………… 1,650
Accumulated Depreciation …………………… 2,450
5-20
Problem 5.26 (Concluded)
2.
Materials
Work in Process
Bal. 7,500
(b) 58,800
Bal. 37,000
(l) 160,000
(a) 60,100
(b) 50,000
8,800
(c) 75,000
(k) 72,000
74,000
Bal. 50,000
(b) 8,800
(k) 72,000
(l) 160,000
(c) 36,000
(d) 10,400
(e) 1,450
(g) 5,500
*Overapplied overhead.
3. Jerico Company
Statement of Cost of Goods Manufactured
For the Month Ended May 31, 20XX
Direct materials…………………………………………………….. $ 50,000
Direct labor ………………………………………………………….. 75,000
Overhead:
Supplies ………………………………………………………….. $ 8,800
Indirect labor ……………………………………………………. 36,000
Depreciation, plant, and equipment …………………… 10,400
5-21
Problem 5.27
1. Overhead rate = $162,500/50,000 = $3.25 per machine hour
Job 1 Job 2
Direct materials …………………………………………… $4,500 $ 9,340
Direct labor …………………………………………………. 1,200 2,100
2. Purchasing rate = $40,000/5,000 = $8 per purchase order
Setup cost rate = $37,500/500 = $75 per setup
Job 1 Job 2
Direct materials …………………………………………… $4,500 $ 9,340
Direct labor …………………………………………………. 1,200 2,100
Overhead:
Purchasing ($8 × 15); ($8 × 20) ………………… 120 160
Setups ($75 × 3); ($75 × 4) ……………………….. 225 300
3. The activity-based approach to assigning overhead gives a more accurate
5-22
Problem 5.28
1. $37,500/7,500 = $5.00 per direct labor hour
3. May 20:
Direct materials (600 × $0.02) ……………………. $12.00
Direct labor (0.75 × $8)……………………………… 6.00
4. Photocopying overhead rate = $37,500/7,500 = $5.00 per direct labor hour
Computer-aided printing overhead rate = $52,500/2,000 = $26.25 per machine
Problem 5.29
Job 97-28 Job 97–35
Prime costs ………………………………………………… $120,000 $50,000
Overhead ……………………………………………………. 60,000* 10,000*
5-23
Problem 5.29 (Concluded)
2. Bid prices with departmental rates:
Job 97-28 Job 97-35
Prime costs ……………………………………………….. $120,000 $ 50,000
Overhead …………………………………………………… 20,835a 51,010b
3. Plantwide Departmental Differences
Revenues …………. $90,000 $362,768 $272,768
Cost of goods sold …………. 60,000 241,845 181,845
4. The departments differ significantly in their overhead intensity, with Depart-
Problem 5.30
1. Direct materials ($0.60 × 50) ………………………… $30.00
Direct labor ($0.15 × 50) ………………………………. 7.50
2. Price = $380 × 1.5 = $570 (Spoilage is not attributable to this job and should
not be added to job cost.)
3. Spoilage cost is identical to that computed in Requirement 1. However, in this
Problem 5.31
1. Direct materials (75 × $0.45) ………………………… $33.75
2. Direct materials (75 × $0.45) ………………………… $33.75
Direct labor (1.70 × $8) ………………………………… 13.60
Problem 5.32
1. Land …………………………………………………………… $ 7,813*
Direct Materials …………………………………………… 8,000
Direct labor …………………………………………………. 6,000
2. Job-Order Cost Sheet
Job 3
MATERIALS DIRECT LABOR OVERHEAD
Req. No. Amount Hrs. Rate Amount Hrs. Rate Amount
Cost Summary
Direct materials …………… $15,813
Direct labor …………………. 20,000
3. Overhead is equivalent to general conditions and finance costs. Finance
costs are traceable to each job; therefore, no allocation problem exists. Allo-
5-26
Problem 5.32 (Concluded)
4. Production costs ………………………………………… $46,578
Marketing costs …………………………..……………… 800
Total cost ………………………………………………… $47,378
Problem 5.33
1. Job-Order Cost Sheet
Job 267
MATERIALS DIRECT LABOR OVERHEAD
Kind Amount Employee Hrs. Rate Amount Hrs. Rate Amount
Novocaine $14 Dentist 0.25 $60 $15 0.5 $32 $16
Cost Summary
Direct materials …………… $32
Direct labor …………………. 25
Problem 5.33 (Concluded)
2. Surfaces Assistanta Dentistb Novocaine Amalgam OHc Total Cost
1 $6.67 $10 $14 $12 $10.67 $53.33
2 10.00 15 14 18 16.00 73.00
a(20/60) × $20 b(20/60) × 0.5 × $60 c(20/60) × $32
(30/60) × $20 (30/60) × 0.5 × $60 (30/60) × $32
1-Surface 2-Surface 3-Surface 4-Surface
Unit revenue ………………. $90.00 $110.00 $150.00 $175.00
Problem 5.34
1. Job-Order Cost Sheet
Potassium Aspartate
MATERIALS DIRECT LABOR OVERHEAD
Type Quantity Cost Hrs. Rate Amount Cost Rate Amount
Aspartic 195.00 $1,121.25 16 $12.50 $200 $200 110% $220
Cost Summary
Direct materials …………… $1,728.21
Direct labor …………………. 200.00
Overhead ……………………. 220.00
If overhead is allocated accurately, they should not sell at $8.80 as the job
earns less than the markup.
2. Revenues ($2,148.21 × 130%) ……………… $2,792.67
3. Total actual costs:
Direct materials………………………………….. $1,790.00
Direct labor ……………………………………….. 225.00
Applied overhead ………………………………. 247.50
5-29
Problem 5.34 (Concluded)
4. Total billing:
Materials …………………………………………………….. $1,790.00
Labor ………………………………………………………….. 225.00
Applied overhead ………………………………………… 247.50
Problem 5.35
Answers will vary.
CYBER RESEARCH CASE
5.36
Answers will vary.
The Collaborative Learning Exercise Solutions can be found on the
The following problems can be assigned within CengageNOW and are auto-
graded. See the last page of each chapter for descriptions of these new assign-
ments.
• Analyzing Relationships—Calculate Cost of various jobs to show impact of
costs on WIP, Finished Goods, Cost of Goods Sold.
• Integrative Problem—Job Order Costing, Support Department Allocation, Rele-
vant Costing (Covering chapters 5, 7, and 17)