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CH 3 HW - Exercise 3-1 Process ICosting and Job-Order...

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Unformatted text preview: Exercise 3-1 Process ICosting and Job-Order Costing [L01] ob-order costing or process costing? Which would be more appropriate in each ofthe following situations—job-order costing or process costing? Job—order costing (8%) a. A custom yacht builder. Job-Order costing Job—order costing (8%) b. Agolfcourse designer. Job—order costing Process costing (8%) c. Apotato chip manufacturer. Process costing Job—order costing (8%) d. A business consultant. Job—order costing Process costing (8%) e. A plywood manufacturer. Process costing s/ Process costing(8%) f. Asofl-drinkbot‘tler. Process costing ”le" I Job—order costing (8%) g. Afilm studio. Job—order costing Joli—order costing (8%) h. Afirm that supervises bridge construction projects. Job—order costing Job—order costing (8%) i. A manufacturer offlne custom jewelry. Job—order costing Job—order costing (8%) j. A made-to-order clothing factory. Job-Order costing Process costing (8%) k. Afactory making one personal computer model. Process costing Process costing (8%) |. Afertilizerfactory. Process costing ob-order costing system, depending on 3. For example, a plywood manufacturer oducts that are constructed of different Exercise 3-3 Compute the Predetermined Overhead Rate [L03] 3n the basis ofdirect labor-hours. At the Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the dwould be $588,888 andthe total direct beginning ofthe year it estimated that its total manufacturing oyerhead would be $588,888 andthe total direct for the yearwas $888,888 and its actual laborwould be 38,888 hours. lts actual total manufacturing oyerhead forthe yearwas $888,888 and its actual total directlaborwas 33,888 hours. E Required: 1NODRRECT ound your answer to 2 decimal places. Compute the company's predetermined oyerhead rate for the year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Predetermined oyerheadrate $ 16.56 perDLH Exercise 3-5 Apply Overhead [L05] Westan Corporation uses a predetermined oyerhead rate of $23.88 perdirect labor-hour. This predetermined rate was based on 12,888 estimated direct labor-hours and $283,288 of estimated total manufacturing oyerhead. er direct labor-hour. This predetermined 3,288 of estimated total manufacturing is m $283,888 and 11300 total direct The company incurred actual total manufacturing oyerhead costs of $28?,888 and 11,888 total direct labor-hours during the period. l .l JJ-t Itlzt | Required: en applied to unlts 0f product during the Determine the amount ofmanufacturing oyerhead that would have been applied to units of product during the pe ri o d. (Omit the "$" sign in your response.) Manufacturing overhead applied $ 21'8480 0 per direct labor-hour. This predetermined 110,825 of estimated total manufacturing costs of $1?5,800 and 8,2?0 total direct icturing overhead for the period. (Input all a.) 1) Exercise 13 Underapplied and Ouerapplied Overhead [LOB] Cretin Enterprises uses a predetermined overhead rate of$21.30 per direct labor-hour. This predetermined rate was based on 8,020 estimated direct labor-hours and $1?0,825 of estimated total manufacturing overhead. The companv incurred actual total manufacturing overhead costs of $135,800 and 8,2?0 total direct labor-hours duringthe period. / annular :1' Requirement 1: Determine the amount of underapplied or overapplied manufacturing overhead for the period. (Input all amounts as positive values. Omit the "$" sign in your response.) Manufacturing overhead underapplied $ 649 lied overhead is closed outto cost ofgoods j overhead on the companv's gross margin (50%) ds sold would increase lav $4349 and the Requirement 2: Assuming thatthe entire amount ofthe underapplied or overapplied overhead is closed outto cost ofgoods sold,what would hethe effect ofthe underapplied oroverapplied overhead onthe companv's gross margin «I for the period? (Omit the "$" sign in your response.) mmtiarz'i' The gross margin would decrease pv $ 649 33, L05] The following activitv was recorded in the ons: lprojects 510,500 ’thn nnnniintn it Iinnn nrn rvliFannv-rt fivnm Han Exercise 3-9 Applying Overhead in a Service Company [L02, L03, L05] Pearson Architectural Design began operations on Januarv 2. The following activity was recorded in the companv's Work in Process accountforthe first month ofoperations: Work in Process Costs ofsupcontracted vvork 80,000 To completed projects 510,500 Direct staff costs 202,000 Studio overhead 252,500 Dnnrnnn nvnhilnnhwnl finnifln in n nnvuinnfirm nn Han nnmnn nflhn fififinlln+fi H iinnn nvn diflnrnnl fvnm ‘Hnn nu: accuurna IL uaca an: urrrclcrn rrurrr Lin: rcaraurr nrumcuular ucalgrr la a acrurcc rrrrrrI au Lin: rrarlrca ur urn: accuurna It Usual all: urrrcrcru IIUIII nu: ted Work is comparable to Direct Materials; names used in manufacturing companies. Costs of Subcontracted Work is comparable to Direct Materials; d is the same as Manufacturing Overhead; Direct Staff Costs is the same as Direct Labor; Studio Overhead is the same as Manufacturing Oyerhead; "rom the difference in terms; the accounting and Completed Projects is the same as Finished Goods. Apartfrom the difference in terms; the accounting 1 by manufacturing companies. methods used bythe company are identical to the methods used by manufacturing companies. 1 and applies studio oyerhead to Work in Pearson Architectural Design uses a job-order costing system and applies studio overhead to Work in ; only one job was still in process.This job Process onthe basis ofdirect staff costs. At the end ofJanuary; only one job was still in process. This job led with $13.400 in direct staffcosts. (the Krimmer Corporation Headquarters project) had been charged with $11400 in direct staffcosts. Requirement 1: g January. (Do not include the percent Compute the predetermined oyerhead rate that was in use during January. (Do not include the percent sign (%). Predetermined oyerhead rate 130 % 'rocess on the basis of $202,000 of direct 2, 600 ect staff costs F costs Requirement 2: Krimmer Corporation Headquarters Complete the following job cost sheetforthe partially completed Krimmer Corporation Headquarters project. (Omit the "$" sign in your response.) Job CostSheet Krimmer Corporation Headquarters Project As ofJanuary 31 Costs ofsubcontracted work $12,180 Directstaffcosts 13,400 Studio oyerhead 11,420 Total costto January 31 $43,000 .+El% maining in Work in Process at the end of rocess account at that point must apply to irect staffcosts; the following computation 00 al Entries [L04, L05, L03] Exercise 3-11 Applying Overhead in a Service Company, Journal Entries [L04, L05, L08] IZI MOORE-SGT INCORRECT :osts ofits landscaping projects. The company Heritage Gardens uses a job-order costing system to trackthe costs ofits landscaping projects. The company le followingtable provides data concerning the proyides complete garden design and landscaping seryices.The followingtable provides data concerning the ere was no work in process atthe beginning of three landscaping projects thatwere in progress during May. There was no work in process atthe beginning of May. Project mum...” n........... m......_._ I.l".'lllli:llll!:i blidllulb‘l Nguyen 9 Designer-hours 299 99 119 ID Directmaterials cost $ 4,999 $ 1,999 $ 3,599 I0 Directlaborcost $ 2.500 $ 900 $ 1.500 V/ ‘. )llllEi :r 3ts are applied to projects on the basis of Actual overhead costs were $15,999 for May. Overhead costs are applied to projects on the basis of [l { 1e costs of the garden design studio. The designer-hours since most of the overhead is related to the costs of the garden design studio. The iams and Chandler projects were completed in predetermined overhead rate is $45 per designer-hour. The Williams and Chandler projects were completed in nth. No otherjobs were in process during Mav. Mav; the Nguven projectwas not completed bvthe end ofthe month. No otherjobs were in process during Mav. Requirement 1: arged to each project during lutav. (Omit the "SB" Compute the amount of overhead cost that would have been charged to each project during Mav. (Omit the "3%" sign in your response.) idler Nguven Williams Chandler Nguven (33%) $ 5414 (33%) Overhead applied $ 9200 $ 3680 $ 5414 Nguven 119 X 846 $ 5.4M Requirement 2: and Chandler projects and the transfer ofcosts Prepare a journal entrv showing the completion ofthe Williams and Chandler projects and the transfer ofcosts the "$" sign in your response.) to the Completed Projects (i.e.. Finished Goods) account. (Omit the "$" sign inyour response.) Debit Credit General Journal Debit Credit J [tortrtratz'l' 23080 (25%) Completed Projects 23080 23080 (25%) Work in Process 23080 Debit Credit 23,999* 23,999* Requirement 3: no of the month? (Omit the "$" sign in your What is the balance in the Work in Process account at the end of the month?I (Omit the "$" sign in your J response.) :‘martwr Total cost in work in process a“; 10514 of the costs associated with the Nguven Requirement 4: What isthe balance in the Overhead account atthe end ofthe month? What isthis balance ca||ed'?(0m'rt the J "$" sign in your response.) nonth'? What isthis balance called? (Omit the [TL )llllEitl'J' Dverappliecl overhead (50%) Balance In Oyerhead account $ 2454 Dverapplled overhead id COSTS arhead called oyerapplied oyerhead. Exercise 3-15 Departmental Overhead Rates [L02, L03, L05] The company uses a job-order cost system Diewold Company has two departments, Milling and Assembly. The company uses a job-order cost system rent. The Milling Department bases its rate and computes a predetermined oyerhead rate in each department. The Milling Department bases its rate on direct labor cost. Atthe beginning ofthe on machine-hours. and the Assembly Department bases its rate on direct labor cost. Atthe beginning ofthe year, the company madethe following estimates: Department Milling Assembly Direct labor-hours 8.200 H.000 Machine-hours 52,000 3,100 Manufacturing oyerhead cost $52T,000 lB T8T,500 / Direct labor cost $ moon :5 aaoooo “OW-"5" Requirement 1: apartment. (Round your answers to 2 Compute the predetermined oyerhead rate to be used in each department. (Round your answers to 2 decimal places. Omit the "S" and "it" signs in your response.) Department sembly Milling Assembly 50%) % Predetermined oyerhead rate $ 8. 5|] 125 “it: teed cost tion base chine —hour teed cost tion base .I'ECt labor COSt Requirement 2: l above are in effect. The job cost sheet for Assume that the overhead rates vou computed in requirement 1 above are in effect. The job cost sheet for ved the following: .Job 40?. which was started and completed during the year. showed the following: Department Milling Assembly Direct labor-hours 5 18 Machine-hours 82 3 Materials requisitioned $ 800 $ 380 Directlabor cost $ 45 $ 180 r answer to 2 decimal places. Omit the Compute the total overhead cost applied to Job 40?. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Total overhead cost applied $ 982 :ad cost to be charged to some jobs if the { I Jr cost instead ofusing departmental rates? HM“ "' machinetime and little laborcost.thevwould :ifa plantwide rate based on direct labor cost is would be true ofJob 40? which required required onlv a small amount oflabor cost. LOB] Problem 3-18 Comprehensive Problem [L03 , L04, L05 , L0]Ir , LOB] esidential moldings at a plant located in Sovereign Millwork. Ltd.. produces reproductions of antique residential moldings at a plant located in ome ofwhich are made onlv to order. the Manchester. England. Since there are hundreds of products. some ofwhich are made onlv to order. the art of the companv's fiscal vear. inventorv companv uses a job-order costing svstem. On Julv 1. the start of the companv's fiscal year. inventorv account balances were as follows: Raw Materials £ 10.800 Workin Process £ 4.800 Finished Goods £ 8.100 machine-hours. Forthe fiscal vear starting The companv applies overhead costto jobs on the basis ofmachine-hours. Forthe fiscal vear starting 00 machine-hours and incur £88.?80 in Julv 1. it was estimated that the plant would operate 44.800 machine-hours and incur 888.180 in sactions were completed: manufacturing overhead cost. During the vear. the following transactions were completed: a. Raw materials purchased on account. £1 58.500. 3.400 (materials costing 8118.300 were b. Raw materials requisitioned for use in production. £138.400 (materials costing £118.800 were 'ect). chargeable directlvto jobs; the remaining materials were indirect). c. Costs for emplovee services were incurred as follows: Directlabor 8 80.100 / l.t mitt-i | ofthis amount related to factory operations, es). 'this amount was on equipment used in sed in selling and administrative activities.) ompanv recorded 50,400 machine hours of airjoh cost sheets were completed. 00,200. These goods had cost£300,300 to m'rt the "E" sign in your response.) Debit Credit 159500 (2%) 159500 (2%) 119300 (2%) 20100 (2%) 139400 (2%) 90100 (2%) 00400 (2%) 20100 (2%) 49000 (2%) 220200 (2%) 13600 (2%) 3900 (2%) 11500 (2%) 10900 (2%) 10900 (2%) 14900 (2%) 14900 (2%) 19000 (2%) 5000 (2%) 25600 (2%) 110000 (2%) 110000 (2%) 310400 (2%) 310400 (2%) 310400 (0%) 310400 (0%) 300300 (2%) 300300 (2%) lhdirectlahor £00,400 Sales commissions £ 20,?00 Administrative salaries £ 40,000 d. Prepaid insurance expired during the year, £1T,500 (£13,000 ofthis amount related to factorv operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factorv, £1 0,000. f. Advertising costs incurred, £1 4,000. g. Depreciation recorded on equipment, £25,500. (£10,000 of this amount was on equipment used in factorv operations; the remaining £5,000 was on equipment used in selling and administrative activities.) h. Manufacturing overhead costwas applied to jobs, £ ? . (The companv recorded 50,400 machine hours of operating time during the vear.) i. Goods that had cost£31 0,400 to manufacture according to theirjop cost sheets were completed. j. Sales (all on account) to customers during the veartotaled £408,200. These goods had cost£300,300 to manufacture according to theirjop cost sheets. Requirement 1: Prepare journal entries to record the transactions for the vear. {Omit the "2‘" sign in your response.) GeneraIJournal Debit Credit a_ Raw materials 159500 hccounts payable 159500 0. Work in process 119300 Manufacturing overhead 20100 Raw materials 139400 c. ‘l'l'ork in process 90100 Manufacturing overhead 60400 Sales commissions expense 20100 Salaries expense 49000 Salaries and wages payable 220200 0. Manufacturing overhead 13600 Insurance expense 3900 Prepaid insurance 11500 0. Manufacturing overhead 10900 hccounts payable 10900 f. lldvertising expense 14900 hccounts payable 14900 g_ Manufacturing overhead 19000 Depreciation expense 5000 hccumulated depreciation 25600 h_ Work in process 110000 Manufacturing overhead 110000 Finished goods 310400 1l'l'ork in process 310400 j. ilccounts receivable 490,200 Sales 490,200 Cost of goods sold 300300 Finished goods 300300 IZI INCORRECT +1.0X1155 + 1.031.155 + 1.03155 + 113x155 +1.0X1155 +1.0X1155 +1.UX1155 +1.|JX1.155 + 113x155 +1.0X1l'55 +1.0X1155 +1.0X1155 + 1.031.155 + 1.03155 + 113155 + 1.0X1155 +1.D=<1J'55 +1.0X1J'55 +1.0X1ISE +1.0X1155 + 1.UX1155 +1.0X1155 +1.0X1J'55 +1.0X1J'55 +1.0X1155 +1.0X1155 +1.0X1155 +1.0X1155 +1.0X1J'55 +1.0X1ISE + 1.0X1156 + 113155 + DDXHSE +1.0X1ISB + 0.0X1156 +1.0X1156 +1.0X1155 +1.DX1J'55 +1.0X1J'55= 2% + 2% + 2% + 2% + 2% + 2% + 2% + 2% + 2% + 2% + 2% + 2% + '-2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+2%+D%+2%+U%+2%+2%+ '80 Mil-Is = E 2.2 per MH Requirement 2: 1d Cost of Goods Sold. Post relevant data Prepare T—accounts for inventories, Manufacturing Overhead, and Cost ofGoods Sold. Post relevant data iter the opening balances in your inventory from your journal entries to these T—accounts (don‘t forget to enterthe opening balances in vour inventorv :ord the transactions in the given order. accounts). Compute an ending balance in each account. (Record the transactions in the given order. Omit the "£" sign in your response.) Raw Materials 139400 (3%) Eleg. Elsi 10900 13 139400 a 159,500 End. EIal 31,000 Work In Process 310400 (3%) Eleg. Elal 4000 1 310400 1) 119300 c 90100 ll. 110800 End. Elal 14600 E Finished Goods INWRRECT 300300 (3%) Eleg. EIal 0100 j 300300 1 310400 End. Elal 10200 Manufacturing Overhead 110880 (3%) 11 20100 11 110880 c 60400 [1 13600 B 10900 g 19000 End. EIal 13920 Cost ofGoods Sold j 308300 + D.DX1I3? +1.UX1I3? +1.DX1I3T +1.DX1J'3T + D.DX1I3T +1.0X1I3? + 10741.13? +1.0X1I3? +1.DX1J'3T +1.0X1J'3T +1.0X1I3T +1.0X1I3? +1.UX1I3? +1.DX1I3T +1.DX1J'3T + 1.03113? + 1.03113? + 113x113? +1.0X1I3T +1.0X1I3? +1.E|X1I3? + 1.03113? + 113x113? +1.0X1I3T +1.0X1I3T +1.0X1I3?= 3% + 3% + 3% + 3% + 0% + 0% + 3% + 3% + 3% 'o+3%+3%+3%+3%+3%+3%+3%+3%+3%+3%+3%+3%+3%+3%+3%+3% IZI rthe vear? menswear cturing Overhead account to Cost of Goods Debit Credit 1392a (25%) 1392a (25%) iedule ofcostofgoods manufactured; all of :he journal entries and T-accounts vou have £490200 (5%) 322220 (5%) 175930 (5%) 20m (5%) 49mm (5%) 39m] (5%) 14900 (5%) 5mm (5%) 94300 (5%) c 01600 (5%) Problem 3-20 Schedule flf Cost of Goods Manufactured; Overhead Analysis [L03, L05, L06, LOH ead analysis [L03’ L05, L06, L07] gsvstem and applies overhead costto jobs forthe vear, the companv's estimates were: , $03,300. The companv has provided the (h) Prepare a journal entrv to close anv balance in the Manufacturing Overhead account to Cost ofGoods Sold. (Omit the "£" sign in your response.) GeneralJournal Cost of goods sold Manufacturing overhead Requirement 4: Prepare an income statementforthe vear. (Do not prepare a schedule ofcost ofgoods manufactured; all of the information needed forthe income statement is available in the journal entries and T-accounts vou have prepared.) (Omit the "£" sign in your response.) Sovereign Millvvork, Ltd. Income Statement Forthe Year Ended June 30 Sales Cost of goods sold Gross profit Selling and administrative expenses: Sales commissions Midnistrative salaries Insurance expense Mvertising expenses Depreciation expense Net operating income The Pacific Manufacturing Companv operates a job-order costing svstem and applies overhead costto jobs on the basis ofdirect labor cost. In computing an overhead rate forthe vear, the companv's estimates were: manufacturing overhead cost, $119,052; and direct labor cost, $83,300. The companv has provided the follovving data: Beginning Ravv Materials $21,100 Workin Process $43,000 Finished Goods $5?,?00 The foiiovving actual costs were incurred during the year: Ending $15,800 $ 40,300 $ so,2oo Purchase ofravv materials (alldirect) $132,500 Direct labor cost $ Manufacturing overhead costs: Insurance, factorv Depreciation ofeguipment Indirect labor Propertvtaites Maintenance eases-assess Rent, building i9,300 'r,ooo 1r,ooo 41,3oo esoo 11,2oo 35,1oo 20100 49000 3900 14900 5000 Debit 13920 490200 322220 115900 94300 01600 Credit 13920 / l.l mitt-i | / l.l mitt-i | 1NOORRECT tthe "11" sign in your response.) abor COSt 'head for the vear. (Input all amounts as Requirement 2: Omit the "$" sign in your response.) 0 21,100(4%) 132,500(4%) 153600(4%) 15,000(4%) $ 131000(4%) 19,300(4%) 132431 (0%) 349531 (0%) 43,600(4%) 393131 (0%) 40,300 (4%) 352031 (0%) Requirement 1: [a] Compute the predetermined overhead rate forthe vear. (Omitthe "10" sign inyour response.) Predetermined overhead rate 144 9‘: [l1] Compute the amount of underapplied or overapplied overhead for the year. (Input all amounts as positive values. Omit the "$" sign in your response.) Underapplied overhead $ 6 , 1'00 Prepare a sche...
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