Direct costs direct materials direct manuf labor

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Direct Costs Direct Materials Direct Manuf. Labor INDIRECT COST POOL COST ALLOCATION BASE COST OBJECT PRODUCT DIRECT COSTS
The posting of entries to T-accounts is as follows: Materials Control Work-in-Process Control Bal. 12 (1) 150 (2) 145 (3) 10 Bal. 2 (2) 145 (4) 90 (8) 63 (9) 294 Bal. 6 Finished Goods Control Cost of Goods Sold Bal. 6 (9) 294 (10a) 292 (10a) 292 (11) 5 Manufacturing Department Overhead Control Manufacturing Overhead Allocated (3) 10 (5) 30 (6) 19 (7) 9 (11) 68 (11) 63 (8) 63 Accounts Payable Control Wages Payable Control (1) 150 (4) 90 (5) 30 Accumulated Depreciation Various Liabilities (6) 19 (7) 9 Accounts Receivable Control Revenues (10b) 400 (10b) 400 The ending balance of Work-in-Process Control is $6. 3. (11) Manufacturing Overhead Allocated 63 Cost of Goods Sold 5 Manufacturing Department Overhead Control 68 Entry posted to T-accounts in Requirement 2. 4- 19
4-27 (15 min.) Job costing, unit cost, ending work in progress. 1. Direct manufacturing labor rate per hour $25 Manufacturing overhead cost allocated per manufacturing labor-hour $20 Job M1 Job M2 Direct manufacturing labor costs $275,000 $200,000 Direct manufacturing labor hours ($275,000$25; $200,000$25) 11,000 8,000 Manufacturing overhead cost allocated (11,000 $20; 8,000 $20) $220,000 $160,000 Job Costs May 2009 Job M1 Job M2 Direct materials $ 75,000 $ 50,000 Direct manufacturing labor 275,000 200,000 Manufacturing overhead allocated 220,000 160,000 Total costs $570,000 $410,000 2. Number of pipes produced for Job M1 1,500 Cost per pipe ($570,000 1,500) $380 3. Finished Goods Control 570,000 Work-in-Process Control 570,000 4. Raymond Company began May 2009 with no work-in-process inventory. During May, it started and finished M1. It also started M2, which is still in work-in-process inventory at the end of May. M2’s manufacturing costs up to this point, $410,000, remain as a debit balance in the Work-in-Process Inventory account at the end of May 2009. 4- 20
4-28 (2030 min.) Job costing; actual, normal, and variation from normal costing. 1. Actual direct cost rate for professional labor = $58 per professional labor-hour Actual indirect cost rate = = $48 per professional labor-hour = = $60 per professional labor-hour Budgeted indirect cost rate = = $45 per professional labor-hour (a) Actual Costing (b) Normal Costing (c) Variation of Normal Costing Direct-Cost Rate $58 (Actual rate) $58 (Actual rate) $60 (Budgeted rate) Indirect-Cost Rate $48 (Actual rate) $45 (Budgeted rate) $45 (Budgeted rate) 2. (a) Actual Costing (b) Normal Costing (c) Variation of Normal Costing Direct Costs Indirect Costs Total Job Costs $58  120 = $ 6,960 48  120 = 5,760 $12,720 $58  120 = $ 6,960 45  120 = 5,400 $12,360 $60  120 = $ 7,200 45  120 = 5,400 $12,600 All three costing systems use the actual professional labor time of 120 hours. The budgeted 110 hours for the Pierre Enterprises audit job is not used in job costing. However, Chirac may have used the 110 hour number in bidding for the audit. The actual costing figure of $12,720 exceeds the normal costing figure of $12,360 because the actual indirect-cost rate ($48) exceeds the budgeted indirect-cost rate ($45). The normal costing figure of $12,360 is less than the variation of normal costing (based on budgeted rates for direct costs) figure of $12,600, because the actual direct-cost rate ($58) is less than the budgeted direct-cost rate ($60). Although not required, the following overview diagram summarizes Chirac’s job-costing system. 4- 21

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