practice problems test 1

practice problems test 1 - Accounting2102 Farmer...

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Accounting 2102 Farmer Practice Problems Test 1 Break and Leg, LLC Break a Leg, LLC employs a normal costing system in the manufacturing of its dance apparel. The following information relates to operations for the year ended December 31, 2005: Total manufacturing costs $320,000 Cost of goods manufactured $205,000 Actual manufacturing overhead $64,000 Applied manufacturing overhead is 30% of total manufacturing costs. Manufacturing overhead is applied to production at a rate of 80% of direct labor costs. 1. Prepare the journal entry to record direct labor costs incurred. 2. Prepare the journal entry to record the usage of direct materials in production. 3. Prepare the journal entry to record the allocation of manufacturing overhead to production. 4. Prepare the journal entry to close out manufacturing overhead at year end. 5. If Finished Goods Inventory decreased by $5,000 during the year and total sales reported for the year totaled $350,000, what is the gross profit reported on the income statement given entry 4. (see above) has been made? applied MOH = 30% x total manufacturing costs 96,000 = 30% x 320,000 MOH = 80% x DL costs 96,000 = 80% x 120,000 DM 104,00 0 DL 120,00 0 MOH 96,00 0 total manufacturing costs 320,00 0 1. WIP 120000 Wages Payable 120000 2. WIP 104000 RM Inventory 104000 3. WIP 96000 MOH 96000 4. MOH 32000 COGS 32000 5. sales 350,000 (COGS) (210,000 ) (MOH adjustment) 32,000 Page 1 of 7 69db1e1c0b2392c4e32683af53a7773def923590.doc
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Farmer Practice Problems Test 1 gross profit 172,000 You Got It . . . more CVP practice . . . solve for the unknowns 1. SR 360,000 (VC) (120,000 ) CM %=240,000/360,000=2/3% CM 240,000 BE SR=90,000/2/3%=135,000 (FC) (90,000 ) OP Y 150,000 2. SR 55,000 CM%=44,000/55,000=80% (VC) (11,000 ) BE SR=25,000/80%=31,250 CM 44,000 (FC) (25,000 ) OP Y 19,000 3. SR 320,000 80,000=60,000/CM% (VC) (80,000 ) CM%=75% CM 240,000 VC%=25% (FC) (60,000 ) 25%=80,000/SR OP Y 180,000 SR=320,000 4. SR 160,000 160,000=FC/ (30,000/160,000) (VC) (130,000 ) FC=30,000 CM 30,000 (FC) (30,000 ) OP Y - Page 2 of 7 69db1e1c0b2392c4e32683af53a7773def923590.doc Sales Revenue Variable Expenses Total Contribution Margin Fixed Expenses Net Income Break Even Sales Revenue 1 . ? 120,000
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This note was uploaded on 05/26/2011 for the course ACCT 2102 taught by Professor Farmer during the Spring '08 term at University of Georgia Athens.

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practice problems test 1 - Accounting2102 Farmer...

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