ACG 2071 Managerial AccountingProduct Costing and Cost Flows - Sample Problems forChs 28-34Answers appear inred.DRAFT
Problem 1- The balance sheet dated December 31, 2003, has a balance in the Finished Goods Inventory account of $26,200.The December 31, 2004, balance sheet has a balance in the Finished Goods Inventory account of $24,000. Work in Process Inventory account has a beginning balance of $20,000 and an ending balance of $30,000.If the cost of goods manufactured is $340,000, how much is cost of goods sold?Beginning FG inventory$ 26,200
+ CGM340,000
= Available366,200
- Ending FG inventory(24,000)
= Cost of goods sold$342,200
Problem 2-Alex Companys Work in Process Inventory account has a beginning balance of $60,000 and an ending balance of $50,000.Current manufacturing costs total $200,000. How much iscost of goods manufactured?$60,000 + $200,000 - $50,000 = $210,000
Problem3Hernandez, Inc. manufactures calculators. The company employs an actual costing system. During May, Hernandezs transactions included the following:Direct labor cost incurred$5,400
Total manufacturing overhead cost6,650
Direct materials purchased11,500
Raw materials inventory, beginning160
Raw materials inventory, ending280
Sales23,000
Selling expenses2,100
Work in process inventory, beginning220
Work in process inventory, ending250
A.Brieflylistany additional information you need to calculate cost of goods sold for this company. (Be specific.)Beginning finished goods inventory and ending finished goods inventory (You have enough information to calculate cost of goods manufactured so you don't need to be told that amount.)B.How much is the cost of direct materials issued to production during May?Raw materials inventory, beginning$ 160
Direct materials purchased11,500
Less Raw materials inventory, ending (280)
Cost of direct materials issued to production$11,380
C.How much is cost of goods manufactured for May?Materials issued to production$11,380
Direct labor cost incurred5,400
Manufacturing overhead cost 6,650
Total manufacturing costs22,430
Add: Work in process inventory, beginning220
Less: Work in process inventory, ending (250)
Cost of Goods Manufacturing$23,400
Problem4Culvyhouse Company uses an actual product costing system. It reported the following amounts for 2003:Raw materials purchased$72,000Beginning work-in-process inventory$21,000
Direct materials used70,000Ending work-in-process inventory16,000
Indirect materials used4,000Selling and administrative expensesincurred23,000
Direct labor used66,000Other manufacturing overhead costsincurred18,000
Indirect direct labor used7,000Beginning finished goods inventory6,000
Ending finished goods inventory9,000
A. Calculate the cost of goods manufactured.Cost of direct materials used$70,000
Cost of direct labor used66,000
Cost of MOH:$18,000 + $4,000 + $7,00029,000
Total manufacturing costs$165,000
Add beginning WIP21,000
Less ending WIP(16,000)
Cost of goods manufactured$170,000
B.Calculate cost of goods sold.Beginning FG inventory$6,000
Add CGM (part A)170,000
Less ending FG inventory(9,000)
= Cost of goods sold$167,000
Problem 5-Listed below are selected changes due to various transactions in the manufacturing process using anactual costing system. Identify whichaccount is changed as a result of each action listed in items 1 through 10 below by printing the code of the account(s) in the space provided.Some changes may have more than one answer.Accounts
RM - Raw Materials Inventory
FG - Finished Goods Inventory
WIP - Work-in-Process Inventory
MOH - Manufacturing Overhead
CGS - Cost of Goods Sold
AnswersChanges
WIP1. Increases when manufacturing overhead is incurred
WIP2. Increases when indirect materials are transferred to production
RM3. Increases when raw materials are purchased on account.
RM4. Decreases when direct materials are used in production
WIP5. Increases when direct labor costs are incurred
FG6. Increases when goods are finished.
WIP7. Decreases when goods are finished.
WIP8. Increases when indirect labor costs are incurred
FG9.Decreases when goods are sold.
CGS10. Increases when goods are sold.
Problem6- Norris, Inc. manufactures calculators. Norris uses an actual costing system. During June, Norriss transactions and accounts included the following:Work in process inventory, beginning$8,800Sales$42,000
Work in process inventory, ending7,500Direct labor cost (3,100 hours)55,000
Indirect materials issued from Supplies3,600Raw materials purchased143,500
Raw materials inventory, beginning4,600Finished goods inventory, beginning12,300
Raw materials inventory, ending5,800Finished goods inventory, ending11,600
Total manufacturing overhead incurred49,600.
A. How much is the cost of direct materials issued to production during June?Beginning inventory$ 4,600
+ Raw material purchases143,500
= Available148,100
Less ending rawmaterials (5,800)
= Cost of materials used$142,300
B. Calculate the cost of goods manufactured.MATERIALS:
Beginning inventory$ 4,600
+ Raw material purchases 143,500
=Available148,100
Less ending raw materials (5,800)
= Cost of materials used$142,300
LABOR 55,000
OVERHEAD INCURRED 49,600
MANUFACTURING COSTS 246,900
Add beginning WIP8,800
Less ending work in process(7,500)
Cost of goods manufactured$248,200
C. How much is the cost of inventory on the May 31stbalance sheet?Raw materials$ 4,600
Work in process8,800
Finished goods12,300
Total inventory at May 31st$25,700
Problem7- Heath Company uses an actual product costing system. The company reported the following amounts for 2003:Raw materials purchased$120,000Direct labor used $44,000
Beginning raw materials inventory 16,000Manufacturing overhead costsincurred36,000
Ending raw materials inventory 5,000Selling and administrative expenses21,000
Beginning finished goods inventory11,000Beginning work-in-process inventory17,000
Ending finished goods inventory8,000Ending work-in-process inventory16,000
A. Calculate the cost of materials used in production.Beginning raw materials inventory $ 16,000
Raw materials purchased120,000
= Materials available for use$136,000
Less ending raw materials inventory 5,000
= Materials used in production$131,000
B. Calculate the cost of goods manufactured.Materials used in production (part A)$131,000
Direct labor used 44,000
Manufacturing overhead costs incurred 36,000
Total manufacturing costs$211,000
Add beginning work in process17,000
Less ending work in process(16,000)
Cost of goods manufactured$212,000
Problem 8-Peters, Inc. manufactures homework machines. It uses an actual costing system. Peter's keeps a 'Supplies' account for it's indirect materials. During June, Peters transactions and accounts included the following:Finished goods inventory, ending$11,600Sales$324,000
Finished goods inventory, beginning12,300Direct labor cost72,400
Indirect materials issued to production3,200Direct materials purchased178,000
General administrative expenses9,400Work in process inventory, ending12,800
Raw materials inventory, ending7,700Work in process inventory, beginning10,500
Raw materials inventory, beginning5,100Total manufacturing overhead incurred56,100
A. How much is cost of goods manufactured?Beginning raw materials inventory$5,100
Raw materials purchased178,000
= Materials available for use$183,100
Less ending raw materials inventory(7,700)
= Materials used in production$175,400
Direct labor used 72,400
Manufacturing overhead costs incurred 56,100
Total manufacturing costs$303,900
Add beginning work in process10,500
Less ending work in process(12,800)
Cost of goods manufactured$301,600
B. Calculate the cost of goods soldBeginning finished goods$12,300
Cost of goods manufactured301,600
Less ending finished goods inventory(11.600)
= Cost of goods sold$302,300
C. How much will the company report as product costs on the June 30th balance sheet? Raw materials$11,600
Work in process12,800
Finished goods 7,700
= Total inventory at 6-30-03$32,100
Problem 9-The manufacturing operations of Honcho, Inc. had the following balances for the month of March:Inventories3/1/033/31/03
Raw Materials10,00012,000
Work in process6,0007,000
Finished goods30,00022,000
f Honcho transferred $38,000 of completed goods out of work in process during March, how much was the amount of the cost of goods sold?Amounts transferred out of work in process are moved into finished goods as 'cost of goods manufactured'. Beginning finished goods plus cost of goods manufactured less ending finished goods = cost of goods sold $30,000 + $38,000 - $22,000 = $46,000
Problem10 -Saman, Inc. manufactures coasters and uses an actual costing system. During August, Samans accounts included the following balances and transactions:Work in process, beginning$25,200
Work in process, ending27,600
Finished goods beginning7,300
Finished goods, ending6,800
Administrative expenses12,000
Direct labor cost incurred20,400
Materials purchased78,000
Raw materials, beginning3,300
Direct materials used76,400
Manufacturing overhead cost incurred20,100
Sales167,000
Marketing expenses11,000
A. How much is ending raw materials at August 31Beginning inventory$ 3,300
+ Material purchases 78,000
- Direct materials used (76,400)
= Ending raw materials$4,900
B. How much is cost of goods manufactured?Direct materials$76,400
Direct labor20,400
Manufacturing overhead20,100
Total manufacturing costs116,900
Add beginning WIP25,200
Less ending WIP(27,600)
Cost of goods manufactured$114,500
C. How much is cost of goods sold?Beginning FG inventory$7,300
Add CGM (part B)114,500
Less ending FG inventory(6,800)
= Cost of goods sold$115,000
Problem 11Deegan, Inc. manufactures weather machines and uses an actual costing system. During June, Deegans accounts included the following balances and transactions:Raw materials inventory, beginning$700Direct materials purchased$45,000
Raw materials inventory, ending4,850Direct labor cost incurred16,400
Manufacturing overhead costincurred9,500Administrative expenses13,000
Marketing expenses11,000Work in process inventory, beginning7,800
Sales98,000Work in process inventory, ending6,600
A.A. How much is the cost of direct materials issued to production during June?$40,850Raw materials inventory, beginning$700
Direct materials purchased45,000
Goods available45,700
Less raw materials inventory, ending (4,850)
Cost of direct materials issued to production$40,850
B. How much is cost of goods manufactured?$67,950Direct materials used in production (from part A)$40,850
Direct labor cost incurred16,400
Manufacturing overhead costincurred 9,500
Total manufacturing costs66,750
Add: Work in process inventory, beginning7,800
Less: Work in process inventory, ending(6,600)
Cost of Goods Manufactured$67,950
C. Brieflylistany additional information you need to calculate cost of goods sold for this company. (Be specific.)Beginning finished goods inventory and ending finished goods inventoryNote that you already have cost of good manufactured from part B, so it should not be listed here as an additional item needed.
Problem 12Cost of goods manufactured equals $44,000 for 2006. Finished goods inventory is $2,000 at the beginning of the year and $5,500 at the end of the year. Total manufacturing overhead is $4,500. Beginning and ending work in process for 2006 are $4,000 and $5,000 respectively. How much is cost of goods sold for the year?Beginning FG + CGM - CGS = ending FG$2,000 + $44,000 - x = $5,500CGS =$40,500
Problem13Sound Company uses an actual costing system. It reported the following amounts for May, 2006:Raw materials purchased$254,000
Beginning raw materials inventory 12,000
Ending raw materials inventory 7,900
Beginning finished goods inventory7,400
Ending finished goods inventory8,000
Direct labor incurred51,000
Selling and administrative expenses22,300
Actual manufacturing overhead costs36,800
Beginning work-in-process inventory15,100
Ending work-in-process inventory12,000
A. Calculate the cost of direct materials used in production.Beginning raw materials inventory$ 12,000
Raw materials purchased254,000
= Materials available for use$266,000
Less ending raw materials inventory(7,900)
= Materials used in production$258,100
B. Calculate the cost of goods manufactured.Beginning work in process$15,100
Rawmaterials used in production (part A)$258,100
Direct labor used 51,000
Manufacturing overhead costs 36,800
Total manufacturing costs added$346,100
Less ending work in process(12,000)
Cost of goods manufactured$349,200
C.How much will Sound report as total inventories on its May 31 balance sheet?Raw materials$7,900
Work in process12,000
Finished goods 8,000
Total inventory at May 31$27,900
Problem 14- Eng Manufacturing Company developed the following data:Beginning work in process inventory$10,000
Direct materials used150,000
Actual manufacturing overhead85,000
Cost of goods manufactured295,000
Ending work in process15,000
How much are total manufacturing costs for the period?Total manufacturing costs for the period are the costs incurred that are added during the current period:Beginning work in process(given)$ 10,000
Total current manufacturing costs??
Less ending work in process(given)(15,000)
Cost of goods manufactured(given)$295,000
Since the beginning and ending WIP amounts and CGM is known, work backwards to determine how much the total current period manufacturing costs are: $10,000 - $15,000 - $295,000 = $300,000. Note that DM, DL, and MOH are added together to get total current manufacturing costs for the period.
Problem15- The accounting records of Cinotti Manufacturing Company include the following information:Dec. 31, 2004Dec. 31, 2003
Work in process inventory$ 15,000$ 12,000
Finished goods inventory 45,000 51,000
Materials purchased 331,000
Raw materials inventory ? 24,000
Direct materials used 325,000
Manufacturing overhead incurred 132,000
Direct labor 120,000
Selling expenses 70,000
Cinotti uses an actual cost system. Calculate the following:1. Raw materials inventory at 12-31-04 Beginning raw materials inventory$ 24,000
Raw materials purchased331,000
= Materials available for use$355,000
Less materials used in production(325,000)
Ending raw materials inventory$30,000
2. Total manufacturing costs added to Work in Process Inventory during 2004Materials used in production$325,000
Direct labor used 120,000
Manufacturing overhead costs 132,000
Total manufacturing costs added to WIP$577,000
3. Cost of goods manufactured during 2004 Total manufacturing costs added (From part 2)$577,000
Add beginning work in process12,000
Less ending work in process(15,000)
Cost of goods manufactured$574,000
4.Total inventories on Cinottis December 31, 2004 balance sheet Raw materials (from part 1)$30,000
Work in process15,000
Finished goods 45,000
Total inventory at 6-30-03$90,000
5. Assume CGM is $500,000. How much is cost of goods sold for 2004?Beginning finished goods$51,000
Cost of goods manufactured500,000
Less ending finished goods inventory(45,000)
Cost of goods sold$506,000
Problem 16- Earl, Inc. manufactures baseballs uses a normal costing system and allocates overhead based on direct labor cost. During June, Earls accounts included the following balances and transactions: Manufacturing overhead cost incurred$ 33,300Raw materials, beginning$ 11,500
Marketing expenses27,000Finished goods beginning8,400
Administrative expenses24,000Finished goods, ending9,600
Direct labor cost incurred32,000Work in process, beginning21,500
Cost of materials purchased138,600Work in process, ending18,900
Direct materials used in production143,000Sales285,000
A. How much is ending raw materials at June 30$7,100Raw materials inventory, beginning$11,500
Direct materials purchased138,600
Goods available150,100
Less cost of direct materials issued to production(143,000)
Raw materials inventory, ending$ 7,100
B. How much is cost of goods manufactured for June?$210,900Direct materials used in production$143,000
Direct labor cost incurred32,000
Manufacturing overhead cost 33,300
Total manufacturing costs208,300
Add: Work in process inventory, beginning21,500
Less: Work in process inventory, ending(18,900)
Cost of Goods Manufactured$210,900
C. How much is cost of good sold?Beginning finished goods$8,400
Cost of goods manufactured (part B)210,900
Less ending finished goods inventory(9,600)
Cost of goods sold$209,700
Problem 17 -The manufacturing operations of Darden, Inc. had the following balances for the month of March:Inventories3/1/033/31/03
Raw Materials$10,000$12,000
Work in process 6,000 7,000
Finished goods30,000 22,000
If Darden reported cost of goods sold totaling $46,000 in March, how much did ittransfer out of workin process as completed goods?Amounts transferred out of work in process are moved into finished goods as 'cost of goods manufactured'. Beginning finished goods plus cost of goods manufactured less ending finished goods = cost of goods sold $30,000 + ? - $22,000 = $46,000 so CGM = $38,000
Problem 18 -Alderson Bucket Company incurred the following costs: $100 of plastic, 25 hours at $10 per hour, $50 of indirect materials, $50 of indirect labor, $200 for advertising, and $75 to ship the buckets to the customers. How much are total product costs?$100 + (25 x $10) + $50 + $50 = $450; Advertising and shipping to customers (delivery costs) are period costs since they do not relate to the production of the products.
Problem 20 -Top of the Head Comb Company incurred the costs listed below during May to manufacture combs. The company uses a JIT inventory system.Plastic resin$3,500
Factory machine blades (replaced daily)500
Cost to ship to customers600
Production supervisors salary2,100
Product advertising costs1,200
Production labor -42 hours at $20 per hour
Calculate total product costs assuming 10,000 combs are produced.Plastic resin$3,500
Factory machine blades (replaced daily)500
Production supervisors salary2,100
Production labor -42 hours at $20 per hour840
Total product costs$6,940
Cost to ship to customers is delivery expense, a product cost. Product advertising costs are period costs as well. Note that these costs are no part of the cost of getting the products ready to sell.How much is the cost per comb?$6,940/10,000 = $0.694 each
Problem 21Mitchell, Inc. manufactures calculators and employs an actual costing system. During March, Mitchells transactions and accounts included the following:Sales$320,000Raw materials inventory, beginning$6,500
Raw materials acquired (cash paid)135,000Raw materials inventory, ending5,800
Raw materials received on account30,000Finished goods inventory, beginning11,200
Direct labor cost incurred42,000Finished goods inventory, ending12,400
Cost to deliver products to customers800Work in process inventory, beg.18,700
Total manufacturing overhead incurred72,000Work in process inventory, ending19,700
A. How much is the cost of direct materials transferred to production during June?Raw materials inventory, beginning$ 6,500
Rawmaterials purchased ($135,000 + $30,000)165,000
Goods available171,500
Less raw materials inventory, ending (5,800)
Cost of direct materials issued to production$165,700
B. Calculate the cost of goods manufactured.Direct materials used in production (from part A)$165,700
Direct labor cost incurred42,000
Manufacturing overhead costincurred72,000
Total manufacturing costs279,700
Add: Work in process inventory, beginning18,700
Less: Work in process inventory, ending(19,700)
Cost of Goods Manufactured$278,700
Problem 22- CT, Inc. reported $22,000 in work in process at June 1 and $21,300 at June 30. Finished goods was $4,500 on June 1 and $5,100 on June 30. Direct material used in June totaled $88,000. CT incurred $46,000 for Junes manufacturing overhead. Cost of goods manufactured totaled $199,000. How much are total manufacturing costs for June?WIP
Beginning 22,000
199,000CGM
Mfg. costsX
Ending 21,300
Beginning WIP + Total manufacturing costs - CGM = Ending WIP$22,000 + X - $199,000 = $21,300; so Total Mfg. Costs =$198,300
Problem 23 -Zimmerman, Inc. manufactures calculators and employs an actual costing system. During June, Zimmermans transactions and accounts included the following:Raw materials acquired (cash paid)$117,000
Raw materials received on account12,000
Direct labor cost incurred52,000
Total manufacturing overhead incurred72,800
Raw materials inventory, beginning$6,500
Raw materials inventory, ending5,800
Finished goods inventory, beginning11,200
Finished goods inventory, ending12,400
Work in process inventory, beginning26,000
Work in process inventory, ending22,000
A. How much is the cost of direct materials transferred to production during June? Raw materials inventory, beginning$ 6,500
Direct materials purchased ($117K + $12K)129,000
Less Raw materials inventory, ending (5,800)
Cost of direct materials issued to production$129,700
B. Calculate the cost of goods manufactured.Materials issued to production (part A)$129,700
Direct labor cost incurred52,000
Manufacturing overhead cost72,800
Total manufacturing costs254,500
Add: Work in process inventory, beginning26,000
Less: Work in process inventory, ending (22,000)
Cost of Goods Manufacturing$258,500
Problem25-The following information has been collected from Green Companys accounting records for the month of April:Direct materials added to Work in Process Inventory$ 160,000
Indirect materials added to Manufacturing Overhead40,000
Direct labor added to Work in Process Inventory150,000
Indirect labor added to Manufacturing Overhead65,000
Manufacturing overhead added to Work in Process Inventory100,000
Depreciation Expense included in Manufacturing Overhead50,000
Beginning work in process inventory22,000
Cost of goods manufactured415,000
How much is the balance of Work in Process inventory if Green uses a normal costing method?Direct materials added to Work in Process Inventory$ 160,000
Direct labor added to Work in Process Inventory150,000
Manufacturing overhead added to Work in Process Inventory100,000
Total manufacturing costs added$410,000
Add beginning work in process22,000
Less CGM(415,000
Ending work in process$17,000
Problem26Hernandez, Inc. manufactures calculators. The company employs anormal costing system. Any amount of over or underapplied overhead is immaterial. During May, Hernandezs transactions included the following:Direct labor cost incurred$5,400
Total manufacturing overhead costapplied6,650
Total manufacturing overhead cost incurred6,300
Direct materials purchased11,500
Indirect materials issued to production1,100
Raw materials inventory, beginning160
Raw materials inventory, ending280
Sales23,000
Selling expenses2,100
Work in process inventory, beginning220
Work in process inventory, ending250
A.How much is the cost of direct materials issued to production during May?Raw materials inventory, beginning$ 160
Direct materials purchased11,500
Indirect materials issued(1,100)
Less Raw materials inventory, ending (280)
Cost of direct materials issued to production$10,280
B.How much is cost of goods manufactured for May?Materials issued to production$10,280
Direct labor cost incurred5,400
Manufacturing overhead cost applied 6,650
Total manufacturing costs21,330
Add: Work in process inventory, beginning220
Less: Work in process inventory, ending (250)
Cost of Goods Manufacturing$22,300
Note: Indirect materials issued to production are considered manufacturing overhead costs and as such, are already included in the total manufacturing overhead cost amount given.
Problem 27Culvyhouse Company uses a normal product costing system.Any amount of over or underapplied overhead is immaterial.It reported the following amounts for 2003:Raw materials purchased$72,000Beginning work-in-process inventory$21,000
Direct materials used70,000Ending work-in-process inventory16,000
Indirect materials used4,000Selling and administrative expensesincurred23,000
Direct labor used66,000Other manufacturing overhead costsincurred17,000
Indirect direct labor used7,000Beginning finished goods inventory6,000
Manufacturing overhead applied29,000Ending finished goods inventory9,000
A. Calculate the cost of goods manufactured.Cost of direct materials used$70,000
Cost of direct labor used66,000
Cost of MOH applied29,000
Manufacturing costs$165,000
Add beginning WIP21,000
Less ending WIP(16,000)
Cost of goods manufactured$170,000
B.Calculate cost of goods sold. Ignore any over or underapplied overhead.Beginning FG inventory$6,000
Add CGM (part A)170,000
Less ending FG inventory(9,000)
= Cost of goods sold$167,000
Problem 28-Listed below are selected changes due to various transactions in the manufacturing process using anormal costing system. Identify whichaccount is changed as a result of each action listed in items 1 through 10 below by printing the code of the account(s) in the space provided.Some changes may have more than one answer.Accounts
RM - Raw Materials Inventory
FG - Finished Goods Inventory
WIP - Work-in-Process Inventory
MOH - Manufacturing Overhead
CGS - Cost of Goods Sold
AnswersChanges
MOH1. Increases when manufacturing overhead is incurred
MOH2. Increases when indirect materials are transferred to production
RM3. Increases when raw materials are purchased on account.
RM4. Decreases when direct materials are used in production
WIP5. Increases when direct labor costs are incurred
FG6. Increases when goods are finished.
WIP7. Decreases when goods are finished.
MOH8. Increases when indirect labor costs are incurred
FG9.Decreases when goods are sold.
CGS10. Increases when goods are sold.
WIP11. Increases when manufacturing overhead is applied
MOH12. Decreases when manufacturing overhead is applied
Problem29- Norris, Inc. manufactures calculators. Norris uses a normal costing system.Any amount of over or underapplied overhead is immaterial.During June, Norriss transactions and accounts included the following:Work in process inventory, beginning$8,800Sales$42,000
Work in process inventory, ending7,500Direct labor cost (3,100 hours)55,000
Indirect materials issued to production3,600Raw materials purchased143,500
Raw materials inventory, beginning4,600Finished goods inventory, beginning12,300
Raw materials inventory, ending5,800Finished goods inventory, ending11,600
Total manufacturing overhead applied49,600Total manufacturing overhead incurred49,000
A. How much is the cost of direct materials issued to production during June?Beginning inventory$ 4,600
+ Raw material purchases 143,500
- Indirect materials issued(3,600)
= Available144,500
Less ending rawmaterials (5,800)
= Cost of materials used$138,700
B. Calculate the cost of goods manufactured.MATERIALS:
Beginning inventory$ 4,600
+ Raw material purchases 143,500
- Indirect materials issued(3,600)
=Available144,500
Less ending raw materials (5,800)
= Cost of materials used$138,700
LABOR 55,000
OVERHEAD APPLIED 49,600
MANUFACTURING COSTS 243,300
Add beginning WIP8,800
Less ending work in process(7,500)
Cost of goods manufactured$244,600
C. How much is the cost of inventory on the May 31stbalance sheet?Raw materials$ 4,600
Work in process8,800
Finished goods12,300
Total inventory at May 31st$25,700
Problem 30- Heath Company uses a normal product costing system.Any amount of over or underapplied overhead is immaterial.The company applies manufacturing overhead based on 80% of direct labor cost. The company reported the following amounts for 2003:Raw materials purchased$120,000Direct labor used $44,000
Beginning raw materials inventory 16,000Manufacturing overhead costsincurred36,000
Ending raw materials inventory 5,000Selling and administrative expenses21,000
Beginning finished goods inventory11,000Beginning work-in-process inventory17,000
Ending finished goods inventory8,000Ending work-in-process inventory16,000
A. Calculate the cost of materials used in production.Beginning raw materials inventory $ 16,000
Raw materials purchased120,000
= Materials available for use$136,000
Less ending raw materials inventory 5,000
= Materials used in production$131,000
B. Calculate the cost of goods manufactured.Materials used in production (part A)$131,000
Direct labor used 44,000
Manufacturing overhead costs applied (80%*44,000) 35,200
Total manufacturing costs$210,200
Add beginning work in process17,000
Less ending work in process(16,000)
Cost of goods manufactured$211,200
Problem 31-Peters, Inc. manufactures homework machines.It uses a normal costing system.Any amount of over or underapplied overhead is immaterial. Actual manufacturing overhead for the year is $55,500.Overhead is applied based on direct labor cost. During June, Peters transactions and accounts included the following:Finished goods inventory, ending$11,600Sales$324,000
Finished goods inventory, beginning12,300Direct labor cost72,400
Indirect materials issued to production3,200Direct materials purchased178,000
General administrative expenses9,400Work in process inventory, ending12,800
Raw materials inventory, ending4,500Work in process inventory, beginning10,500
Raw materials inventory, beginning5,100Total manufacturing overheadapplied56,100
A. How much is cost of goods manufactured?Beginning raw materials inventory$5,100
Raw materials purchased178,000
= Materials available for use$183,100
Less indirect materials used(3,200)
Less ending raw materials inventory(4,500)
= Materials used in production$175,400
Direct labor used 72,400
Manufacturing overhead costs applied 56,100
Total manufacturing costs$303,900
Add beginning work in process10,500
Less ending work in process(12,800)
Cost of goods manufactured$301,600
B. Calculate the cost of goods soldafter adjustment for over/underapplied overhead.Beginning finished goods$12,300
Cost of goods manufactured301,600
Less ending finished goods inventory(11.600)
= Cost of goods sold$302,300
Overapplied overhead ($55,500-$56,100) (600)
Adjusted cost of goods sold$301,700
C. How much is totalinventoryon the June 30th balance sheet? Raw materials$11,600
Work in process12,800
Finished goods 4,500
= Total inventory at 6-30-03$28,900
Problem 32-The manufacturing operations of Honcho, Inc. had the following balances for the month of March:Inventories3/1/033/31/03
Raw Materials$10,000$12,000
Work in process6,0007,000
Finished goods30,00022,000
If Honcho transferred $38,000 of completed goods out of work in process during March, what was the amount of the cost of goods sold?Amounts transferred out of work in process are moved into finished goods as 'cost of goods manufactured'. Beginning finished goods plus cost of goods manufactured less ending finished goods = cost of goods sold $30,000 + $38,000 - $22,000 = $46,000
Problem33 -Under Company estimates the following overhead costs for 2003:Equipment depreciation$ 30,000
Equipment maintenance64,000
Factory management salaries150,000
Factory rent 50,000
Total manufacturing overhead$294,000
Under Company incurred the following costs for 2003 for job 23:Direct material$80,000
Direct labor60,000
Other jobs incurred $320,000 of direct labor. Under Company is also budgeting $350,000 in direct labor costs and 20,000 machine hours for 2003. Actual manufacturing overhead for 2003 was $300,000.A. Calculate the predetermined overhead rate using direct labor costs as the allocation base.$294,000/$350,000 = $ 0.84 per direct labor dollarB.Which of the allocation bases is preferred?Why?Since most of the overhead costs are related to equipment, machine hours is thepreferred allocation base.C. How much overhead will Under apply to job 23? $0.84 x $60,000 = $50,400D. What is the total cost of job 23?$50,400 + $80,000 + $60,000 = $190.400
Problem 34 -Stranahan Company allocates overhead based on machine hours. Estimated overhead costs for the year total $217,000 and the company estimates that it will use 31,000 machine hours during the year.Actual overhead for the year was $220,000 and the company used 30,000 machine hours.If Job 45 requires 1,000 machine hours, how much overhead will be allocated to Job 45?$217,000/31,000 machine hours = $7.00 per machine hour$7.00 per machine hour * 1,000 machine hours = $7,000
Problem 35 -Fane Company estimates that its employees will work 80,000 direct labor hours during the coming year.Total overhead costs for the year are estimated to be $1,000,000 and the direct labor costs are expected to be $1,300,000.Actual overhead for the year was $980,000 and the company used 82,000 direct labor hours.If the company allocates overhead based on direct labor hours, what is the predetermined overhead rate?$1,000,000/80,000 = $12.50 per direct labor hour
Problem 36 -Hernandez, Inc. manufactures calculators. The company uses a normal costing system. The company allocates overhead at $25 per direct labor hour. Over or underapplied overhead is not material. During May, Hernandezs transactions included the following:Direct labor cost incurred@ $20 an hour$5,400
Manufacturing overhead cost incurred6,800
Direct materials purchased11,500
Indirect materials issued to production1,100
Manufacturing overhead cost applied6,650
Raw materials inventory, beginning160
Raw materials inventory, ending280
Sales23,000
Selling expenses2,100
Work in process inventory, beginning220
Work in process inventory, ending250
A.Brieflylistany additional information you need to calculate cost of goods sold for this company. (Be specific.)Beginning finished goods inventory and ending finished goods inventory (You have enough information to calculate cost of goods manufactured so you don't need that amount.)B.How much is the cost of direct materials issued to production during May?Raw materials inventory, beginning$ 160
Direct materials purchased11,500
Indirect materials issued(1,100)
Less Raw materials inventory, ending (280)
Cost of direct materials issued to production$10,280
C. How much overhead would be applied during May? Direct labor cost/Cost per hour = number of direct labor hours incurred $5,400/$20 = 270 hours Applied = 270 hours x $25 = $6,750 D. How much is over or underapplied overhead for May? $6,750 - $6,800 = $50 underapplied
Problem 37 -At the end of the year, Deary Company had the following balances in selected accounts related to its job cost system:Raw Materials Inventory$40,000Work in Process Inventory$100,000
Finished Goods60,000Cost of Goods Sold800,000
Information concerning manufacturing overhead and labor for the year follows:Actual manufacturing overhead$290,000Direct labor hours incurred15,600
Estimated manufacturing overhead$300,000Direct labor hours estimated15,000
Actual direct labor cost per hour$17MOH applied based onDirect labor hours
A.Calculate the predetermined manufacturing overhead rate.Estimated MOH/ Est. DL hours =
$300,000/15,000 =$20 per DL hour
Note: This is the number we use to apply MOH to jobs as we are working on them.in this case, for each direct labor hour our people work, we add $20 for MOH costs.B.How much overhead did Deary apply to jobs during the year?Must be applied based on the estimated cost per DL hour calculated in part A since we dont know how much the actual cost will be until the end of the period.$20 x 15,600 hours =$312,000
C.How much is CGS after Deary properlyallocatesany under or over-applied manufacturing overhead?Step 1: Determine how much is over or underapplied:
Actual amount in the MOH expense account$290,000
Applied (from part B)(this is how much we took out of the MOH expense account)312,000
Overapplied (a negative balance left in the MOH expense account)($22,000)
[NOTE: This amount cannot stay therewe must take it out and move it all to CGS.
CGS = $800,000 - $22,000 = $778,000
Problem 38 -Saman, Inc. manufactures coasters and allocates overhead based on direct labor cost. Saman uses a normal cost system. During August, Samans accounts included the following balances and transactions:Work in process, beginning$25,200
Work in process, ending27,600
Finished goods beginning7,300
Finished goods, ending6,800
Administrative expenses12,000
Direct labor cost incurred20,400
Materials purchased78,000
Raw materials, beginning3,300
Direct materials used76,400
Manufacturing overhead cost applied20,100
Indirect materials issued to production2,200
Sales167,000
Marketing expenses11,000
Manufacturing overhead cost incurred21,,000
A. How much is ending raw materials at August 31Beginning inventory$ 3,300
+ Material purchases 78,000
- Indirect materials issued(2,200)
- Direct materials used (76,400)
= Ending raw materials$2,700
B. How much is cost of goods manufactured?Direct materials$76,400
Direct labor20,400
Manufacturing overhead20,100
Total manufacturing costs116,900
Add beginning WIP25,200
Less ending WIP(27,600)
Cost of goods manufactured$114,500
C. How much is cost of goods sold? (Be sure to consider the under or overapplied overhead.)Beginning FG inventory$7,300
Add CGM (part B)114,500
Less ending FG inventory(6,800)
= Cost of goods sold$115,000
Underappplied($21,000-$20,100)900
Adjusted cost of goods sold$115.900
Problem 39 -Hager Inc. applies overhead based on direct labor cost using a normal cost system. The company estimated the following annual amounts:Estimated manufacturing overhead$42,000
Estimated direct labor1,600 hours at $15 per hour
Actual amounts for the year were:Actual manufacturing overhead$44,000
Actual direct labor1,550 hours at $16 per hour
A. How much is the predetermined overhead rate?Estimated manufacturing overhead/Estimated direct labor cost =$42,000/(1,600*$15) =$1.75 per direct labor dollarB. How much overhead was applied during the year?Overhead rate x DL$ incurred =$1.75 x [1,550*$16] =$43,400C.Determine the amount of over or underapplied overhead.Applied - Actual = $43,400 - $44,000 =$600 underapplied
Problem 40 -Jiffy Fabricators applies overhead based on direct labor cost. The company provided the following annual amounts:Estimated direct labor2,000 hours at $12.50 per hour
Actual direct labor1,900 hours at $13 per hour
Estimated manufacturing overhead$30,000
Actual manufacturing overhead$31,000
A.How much overhead was applied during the year?$29,640Overhead application rate = Estimated MOH cost/Estimated DL$= $30,000/[2,000*$12.50] = $1.20 per DL$ Overhead applied = $1.20 x [1,900*$13] =$29,640B. Determine the amount of over or underapplied overhead.$1,360 Under appliedApplied MOHActual MOH = $29,640$31,000 = $1,360 underappliedRemember me saying that some of you would forget that 'estimated MOH' does not appear anywhere in the accounting records?
Problem 41 -Deegan, Inc. manufactures bliggles and allocates overhead based on direct labor cost. During June, Deegans accounts included the following balances and transactions:Raw materials inventory, beginning$700Direct materials purchased$45,000
Raw materials inventory, ending850Direct labor cost incurred16,400
Manufacturing overhead cost applied9,500Indirect materials issued to production4,000
Marketing expenses11,000Work in process inventory, beginning7,800
Manufacturing overhead cost incurred9,000Work in process inventory, ending6,600
Sales98,000Administrative expenses13,000
Under and overapplied overhead are considered immaterial.A.How much is the cost of direct materials issued to production during June?$40,850Raw materials inventory, beginning$700
Direct materials purchased45,000
Goods available45,700
Less raw materials inventory, ending (850)
Less indirect materials to production(4,000)
Cost of direct materials issued to production$40,850
B. How much is cost of goods manufactured?$67,950Direct materials used in production (from part A)$40,850
Direct labor cost incurred16,400
Manufacturing overhead cost applied 9,500
Total manufacturing costs66,750
Add: Work in process inventory, beginning7,800
Less: Work in process inventory, ending(6,600)
Cost of Goods Manufactured$67,950
Note: Indirect materials issued to production are considered manufacturing overhead costs and as such, are already included in actual manufacturing overhead.
Problem 42 -The accounting records of Cinotti Manufacturing Company include the following information:Dec. 31, 2004Dec. 31, 2003
Work in process inventory$ 15,000$ 12,000
Finished goods inventory 45,000 51,000
Materials purchased 331,000
Raw materials inventory? 24,000
Direct materials used 325,000
Manufacturing overhead incurred 124,000
Direct labor 120,000
Selling expenses 70,000
Manufacturing overhead is applied at a rate of 110% of direct labor cost. Calculate the following:1. Raw materials inventory at 12-31-04 Beginning raw materials inventory$ 24,000
Raw materials purchased331,000
= Materials available for use$355,000
Less materials used in production(325,000)
Less ending raw materials inventory$30,000
2. Total manufacturing costs added to Work in Process Inventory during 2004Materials used in production$325,000
Direct labor used 120,000
Manufacturing overhead costs applied (110%*$120,000 132,000
Total manufacturing costs added to WIP$577,000
3. Cost of goods manufactured during 2004 Total manufacturing costs added (From part 2)$577,000
Add beginning work in process12,000
Less ending work in process(15,000)
Cost of goods manufactured$574,000
4.Total inventories on Cinottis December 31, 2004 balance sheet Raw materials (from part 1)$30,000
Work in process15,000
Finished goods 45,000
Total inventory$90,000
5. Assume CGM is $500,000. How much is cost of goods sold for 2004?Beginning finished goods$51,000
Cost of goods manufactured500,000
Less ending finished goods inventory(45,000)
Cost of goods sold$506,000
Problem 43 -Earl, Inc. manufactures baseballs and allocates overhead based on direct labor cost. During June, Earls accounts included the following balances and transactions: Manufacturing overhead cost applied$33,300Raw materials, beginning$ 11,500
Indirect materials issued to production1,400Finished goods beginning8,400
Administrative expenses24,000Finished goods, ending9,600
Direct labor cost incurred32,000Work in process, beginning21,500
Cost of materials purchased140,000Work in process, ending18,900
Direct materials used in production143,000Marketing expenses27,000
Manufacturing overhead cost incurred35,000Sales285,000
Under and overapplied overhead are considered immaterial. Ignore over/ underapplied elimination in parts B and C. A. How much is ending raw materials at June 30Raw materials inventory, beginning$11,500
Direct materials purchased140,000
Goods available151,500
Lesscost of direct materials issued to production(143,000)
Less indirect materials to production(1,400)
Raw materials inventory, ending$ 7,100
B. How much is cost of goods manufactured for June?Direct materials used in production$143,000
Direct labor cost incurred32,000
Manufacturing overhead cost applied 33,300
Total manufacturing costs208,300
Add: Work in process inventory, beginning21,500
Less: Work in process inventory, ending(18,900)
Cost of Goods Manufactured$210,900
C. How much is cost of good sold?Beginning finished goods$8,400
Cost of goods manufactured (part B)210,900
Less ending finished goods inventory(9,600)
Cost of goods sold$209,700
D. Is this company using an actual or normal costing system? Normal costing
Problem 44 -Walker Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for May of 2005 as follows:Actual manufacturing overhead$163,800
Estimated manufacturing overhead$158,600
Direct labor incurred2,500 hours @ $22 = $55,000
Direct labor estimated2,600 hours @ $21 = $54,600
A. How much is the manufacturing overhead rate?Estimated manufacturing overhead/estimated direct labor hours =$158,600 / 2,600 hours =$61.00 per DL hourB. How much overhead did Walker apply during the year?Overhead rate times actual DL hours =$61 x 2,500 =$152,500C. How much is over or underapplied overhead at May 31?Actual overhead - applied overhead =$163,800 - $152,500 =$11,300 underapplied
Problem 45 -Harmon Company began jobs 35, 36, 37, and 38 during July. At the beginning of July, jobs 31, 33, and 34 were in production, while jobs 30 and 32 were completed and waiting to be shipped to customers. Jobs 31, 33, 34, 36, and 37 were completed during July. Jobs 30, 31, 32, 34, and 36 were shipped to customers during July.Which jobs were completed and transferred out during July?31, 33, 34, 36, 37Which jobs are in work in process at July 31?35 and 38Which jobs are in finished goods at July 31?33 and 37Calculations:WIP beginning = 31, 33, 34Jobs added = 35, 36, 37, 38Jobs worked on = 31, 33, 34, 35, 36, 37, 38Less jobs completed and transferred out = 31, 33, 34, 36, 37Ending jobs remaining in WIP = 35 and 38Ending jobs remaining in FG = 33 and 37
Problem 46-The underapplied balance of the Manufacturing Overhead account is $30,000. The amount is considered material. The ending balances of Raw materials, Work in Process, Finished Goods, and Cost of Goods Sold are $10,000, $25,000, $50,000, and $425,000, respectively. What amount of the underapplied balance should be allocated to Cost of Goods Sold?Since the amount is considered material, the underapplied amount must be allocated to the three accounts with overhead in them:Work in Process, Finished Goods, and Cost of Goods Sold, based on their balances:Work in Process$25,000
Finished Goods50,000
Cost of Goods Sold425,000
Total$500,000
Allocated to CGS: $425,000/$500,000 x $30,000 =$25,500
Problem 47-Hoart Company applies overhead based on direct labor hours and calculated an overhead rate of $2. Job 55 used $500 of direct materials, 100 machine hours, $750 of direct labor. The labor rate per hour is $15. How much is the cost of job 55?Number of hours = $750/$15 = 50 DL hoursDM + DL + MOH = $500 + $750 + 50*$2 = $1,350Problem 24Gottberg Company bases its predetermined overhead rates on machine-hours. At the beginning of the year, the company estimated its manufacturing overhead for the year would be $56,000 and there would be a total of 40,000 machine-hours. Actual manufacturing overhead for year amounted to $58,000 and the actual machine-hours totaled 44,800. How much manufacturing overhead was applied for the year?Applied at the rate of: $56,000/40,000 = $1.40 per machine hour;$1.40 x 44,800 MH = $62,720; Actual amounts cannot be used to determine the rate because they are not known until the end of the year.
Problem 48 -Moss Company applies manufacturing overhead based on direct labor hours. It provided the following information from its accounting records for 2003:Expected production30,000 labor hours
Actual production28,000 labor hours
Budgeted overhead$1,500,000
Actual overhead$1,450,000
Jobs 102 & 103 are completed during the period.A.What is the overhead application rate?$1,500,000/30,000 = $50 per hourB. How much overhead will be applied to job 103 if its total labor cost was $4,320 and labor is $18 per hour?Number of labor hours = $4,320/$18 = 240 hoursOverhead applied = 240 hours*$50 = $12,000
Problem 49-Sat Companys factory overhead account showed a $8,000 underapplied overhead balance on December 31. Other accounts showed the following balances at year end:Raw materials$100,000
Work in Process40,000
Finished Goods60,000
Cost of Goods Sold700,000
Which will be the balances of each account listed below after disposing the $8,000?Cost of Goods Sold$700,000 + $8,000 =$708,000Work in Process$40,000 no changeFinished Goods$60,000 no changeWork in Process$40,000 no changeUnderapplied overhead is moved to cost of goods sold since most of the overhead cost would likely be in that account by year end.
Problem 50 -Benny Company allocates overhead at $4 per direct labor dollar. Job 52 required 6 cases of direct materials at a cost of $6 per case and took employees of 5 hours to complete. Employees earn $10 per hour. How much is the total cost of Job 52?DM = 6 x $6 = $36DL = $10 x 5 hrs. = $50MOH = $4 x $50 = $200Total cost = $286
Problem 51 -Clinton's Furniture Company estimates its annual factory overhead to be $47,000. The company assigns factory overhead using the number of pieces produced. Clinton budgets annual production at 70,000 pieces of glassware.At year-end, you find out Clinton incurred $52,000 of factory overhead for the year.Suppose the company produced 75,000 pieces in 2002.A. What is the total amount of factory overhead applied to production for the year?($47,000/70,000) x 75,000 = $50,357B. How much is factory overhead under- or over-applied?Answer: $50,357 - $52,000 = $1,643 underapplied
Problem 52-Actual manufacturing overhead costs $120,000; estimated manufacturing overhead costs $100,000; actual machine hours 25,000; and estimated machine hours 20,000. The only cost driver is machine hours.A. Using job order costing, how much is the 2002 predetermined overhead application rate?$100,000/20,000 = $5.00 per hourB. How much isthe amount of manufacturing overhead allocated to jobs during 2003?$100,000/20,000 = $5.00/machine hour; $5.00 x 25,000 = $125,000
Problem 53 -Dougan, Inc. allocates overhead based on a predetermined overhead rate of $16.00 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4 pounds of direct material at a cost of $30.00 per pound. It is estimated it will take employees a total of 20 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24?Direct materials (4 x $30)$120
Direct labor ($12 x 20)240
Manufacturing overhead ($16 x 20)320
Total job cost$680
Problem 54- Duckworth Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $100,000 and direct labor hours would be 10,000. The actual figures for the year were $110,000 for manufacturing overhead and 10,500 direct labor hours. How much is over or underapplied overhead for the year?Actual manufacturing overhead$110,000
Applied overhead:
Rate x DL hours incurred =
[$100,000/10,000] x 10,500 =105,000
Underapplied overhead$5,000
Problem 55- Carr Company has the following estimated costs for next year:Direct materials$30,000Salary of production supervisor$70,000
Direct labor110,000Indirect materials10,000
Factory operating costs144,000Advertising expense32,000
Carr applies manufacturing overhead on the basis of machine hours. Carr estimates that 20,000 direct labor and 32,000 machine hours will be worked during the year.Actualdirect labor and machine hours for the year were 19,600 and 33,000, respectively. Actual overhead was $226,000 for the year. How much overhead is over or underapplied at year end?Overhead rate = Estimated Overhead/Estimated Activity= [$144,000 + $70,000 + $10,000]/32,000 = $7.00 per machine hourApplied = $7.00 x 33,000 machine hours = $231,000Overapplied overhead = Actual overhead - applied overhead = $226,000 - $231,000 = $5,000
Problem 56- Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:Actual manufacturing overhead$150,000Direct labor hours incurred4,800
Estimated manufacturing overhead$140,000Direct labor hours estimated5,000
How should the manufacturing overhead allocation rate be calculated?$140,000 5,000 = $28
Problem 57 -The following amounts were reported by Winkler Company before adjusting its overapplied manufacturing overhead of $20,000.Raw Materials Inventory$40,000 Work in Process Inventory$100,000
Finished Goods 60,000 Cost of Goods Sold840,000
How much will Winkler report as cost of goods sold after it disposes of its overapplied overhead?Since overhead is overapplied, too much was added to the product accounts. To remove overapplied, you must subtract. Since the amount is immaterial, the entire amount is removed from cost of goods sold: $840,000 - $20,000 = $820,000.
Problem 58 -On Monday, Janu Flowers purchases roses costing $8,000. On Tuesday, Janu uses $5,000 of the flowers to begin preparing for Friday evening's Lovers Dance. On Wednesday, Janu paid $1,500 of labor for its employees for working on the job. Overhead is applied at 80% of direct labor cost.What is the ending account balance of Finished Goods after these transactions when the job is complete?Materials = $5,000 + Labor $1,500 + Mfg. overhead ($1,500*80%) $1,200 = $7,700
Problem 59 -During 2003 Lawson Manufacturing expected to produce 100,000 units with $300,000 of overhead, $500,000 of material, and $200,000 in labor. Actual production was 110,000 units with an overhead cost of $280,000, $550,000 in materials used; and $220,000 in labor. All of the goods were completed and transferred to Finished Goods.A.What amount was transferred to Finished Goods?Overhead is applied based on the estimates of overhead and activity: $300,000/100,000 = $3 per unit produced;As activity occurs (i.e., units are produced) the company applies overhead. In this case, the company adds $3 to WIP each time one unit is produced. Total applied: 110,000 units x $3 = $330,000 applied. Total cost transferred: DM + DL + OH applied = $550,000 + $220,000 + $330,000 = $1,100,000B.How much is the amount of over/under applied overhead?Applied = $330,000 less actual $280,000 = $50,000 overapplied
Problem 60 -Hernandez, Inc. pays its employees $12 per hour. It allocates overhead at $3 per direct labor hour. Job R45 required 5 pounds of direct materials at a cost of $5 per pound and took employees of 2 hours to complete. How much is the total cost of Job R45?DM + DL + MOH = total cost[5 x $5] + [2 x $12] + [2 x $3] = $55
Problem 61 -Builder Bob Company allocates overhead at $9 per direct labor hour. Job A45 required 5 boxes of direct materials at a cost of $30 per box and took employees 12 hours to complete. Employees earn $15 per hour. How much is the total cost of Job A45?DM + DL + MOH = (5 x $30) + ($15 x 12) + ($9 x 12) = $438
Problem 62 -Holl Company incurred direct materials costs of $30,000 during the year. Manufacturing overhead applied was $28,000 and is applied based on direct labor costs. The predetermined overhead rate is 70%. How much are Holl Companys total manufacturing costs for the year?$28,000 = .70(DL); so DL = $40,000;DM + DL + MOH = total manufacturing costs for the year$30,000 + $40,000 + $28,000 = $98,000
Problem 63-Bell Manufacturing assigns overhead based on direct labor dollars. The company incurred the following for Job B22: $2,500 for direct materials and 20 hours of direct labor. Employees are paid $11 per hour. The following estimates were made by the company at the beginning of the year for 2004 operations:Expected annual direct labor hours10,000
Expected annual direct labor cost$250,000
Expected manufacturing overhead costs$300,000
How much is overhead applied to job B22?Rate = $300,000/$250,000 = $1.20 per DL dollar;Overhead applied at $1.20 for each dollar of labor incurred on the job: $1.20 x [$11 x 20] = $264
Problem 64- Zing Manufacturing assigns overhead based on direct labor dollars. The company incurred the following for job A24: $200 for direct materials and 30 hours of direct labor. Employees are paid $12 per hour. The predetermined overhead rate was calculated at $1.10 based on direct labor dollars. Estimated manufacturing overhead for the year was $38,000. The company expected to complete 100 jobs during the year. How much is the total cost of job A24?Direct materials$200
Direct labor [30 hours x $12]360
MOH [$1.10 x $360 of labor]396
Total job cost$956
Problem 65-McCargoRepair has the job 26 ($4,000) in beginning work in process, and job 25 ($3,000) in beginning finished goods. Additional job costs incurred during the year were: Job 27 $5,000, Job 28 $4,500, and Job 29 $5,500. Jobs 26, 27 and 29 are completed. Jobs 25, 26 and 29 are sold. What is the cost of ending finished goods?Only job 27;Cost = $5,000Jobs 26, 27, and 29 were transferred from WIP into FG to join job 25 during the year. Jobs (25, 26, and 29) were moved out to CGS when sold. This leaves only job 27 in FG.
Problem 66- McLeod Companys factory overhead account showed a $4,000 overapplied balance on December 31. Other accounts showed the following balances at year end:Raw materials$25,000
Work in Process20,000
Finished Goods30,000
Cost of Goods Sold450,000
Determine the balances of the accounts listed below after disposing the $4,000.A.Cost of Goods Sold= $450,000 - $4,000 = $446,000B.Work in Process= $20,000 -C.Finished Goods= $30,000D. Raw Materials= $25,000
Problem 67-Timber Company uses a predetermined overhead rate of $7.00 per machine hour. If estimated overhead costs were $350,000, overhead costs incurred were $360,000, estimated machine hours were 50,000, and machine hours worked were 51,000 this year, how much is applied overhead?Overhead is applied based on the actual activity. The activity for the $7 rate is 'machine hour.' Every time one machine hour is incurred, $7 is added as MOH to WIP. The rate was calculated by taking total estimated MOH costs divided by estimated machine hours:$350,000/50,000 = $7. Applied = $7 x 51,000 = $357,000
Problem 68- Fibbe Company estimated it would incur $65,000 of manufacturing overhead during 2004. An analysis indicates that overhead applied totaled $68,000. The actual manufacturing overhead cost during the year was $66,000. How much is over or under applied overhead?Actual manufacturing overhead costs increase the MOH expense account. Applied MOH costs decrease it. The difference is over or under applied. Note that the estimated MOH amount does not get recorded into the accounting records.Actual MOH costs($66,000)
Applied MOH 68,000
Overapplied overhead$2,000
Problem 69 -Calky, Inc. completed Job No. G23 during 2004. The job cost sheet listed the following:Direct materials$15,000
Direct labor$5,000
Manufacturing overhead$10,000
Units produced1,000 units
Units sold800 units
How much is the cost of the finished goods on hand from this job?Accrual basis accounting tells us that the costs to produce are the costs that become inventory:Costs of all 1,000 units = DM + DL + MOH = $15,000 + $5,000 + $10,000 = $30,000Cost per unit to produce = $30,000/1,000 = $30 per unitCost of goods on hand (ending inventory) = $30 x (1,000 - 800) = $6,000
Problem 70- Puerto Company allocates overhead based on a predetermined overhead rate of $3.00 per direct labor hour.Job 51 required 2 cases of direct material at a cost of $10.00 per case and took employees who earn $12.00 per hour a total of 3 hours to complete. What is the total cost of Job 51?DM + DL + MOH = [2 cases x $10] + [3 hrs x $12] + [3 hrs. x $3] = $65
Problem 71 Singleton Company applies overhead based on an overhead rate of $0.25 per direct labor dollar.Job 24 used $800 of direct materials, 620 machine hours, and 150 hours of direct labor. The labor rate per hour is $18. How much is the cost of job 24?Direct materials$800
Direct labor (150*$18)2,700
MOH ($2,700*$0.25)675
Cost of job 24$4,175
Problem 72-Hang Companys factory overhead account showed a $9,000 underapplied overhead balance on December 31. Other accounts showed the following balances at year end:Raw materials$100,000
Work in Process120,000
Finished Goods80,000
Cost of Goods Sold2,200,000
How much will cost of goods sold be after disposing of the $9,000?
Cost of goods sold adjusted balance = $2,200,000 + $9,000 =$2,209,000
Underapplied overhead is added to the accounts to which it is allocated because not enough overhead was allocated.
Problem 73-Yetter Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for May of 2005 as follows:Actual manufacturing overhead$180,000
Estimated manufacturing overhead$188,600
Direct labor incurred4,000 hours @ $23 = $92,000
Direct labor estimated4,100 hours @ $22 = $90,200
A. How much is the predetermined overhead rate?Since the actual amount of overhead and actual direct labor incurred is not known until the end of the period, we must use estimated amounts to determine the POHR. Estimated MOH/ Estimated DLH = $188,600/$4,100 =$46 per Direct labor hourB. How much overhead should be applied in total during May?Each time one direct labor hour is incurred, we must apply (add) $46 of manufacturing overhead. $46/DLH x 4,000 hours =$184,000C.How much is over or underapplied overhead at May 31? Actual MOH - Applied MOH = Over/Underapplied $180,000 - $184,000 =$4,000 overapplied
Problem 74Zimmerman, Inc. manufactures calculators and employs a normal costing system. During June, Zimmermans transactions and accounts included the following:Raw materials acquired (cash paid)$124,000
Raw materials received on account12,000
Indirect materials issued to production7,000
Direct labor cost incurred52,000
Total manufacturing overhead applied72,800
Total manufacturing overhead incurred82,000
Raw materials inventory, beginning$6,500
Raw materials inventory, ending5,800
Finished goods inventory, beginning11,200
Finished goods inventory, ending12,400
Work in process inventory, beginning26,000
Work in process inventory, ending22,000
A. How much is the cost of direct materials transferred to production during June? Raw materials inventory, beginning$ 6,500
Direct materials purchased ($124K + $12K)136,000
Indirect materials issued(7,000)
Less Raw materials inventory, ending (5,800)
Cost of direct materials issued to production$129,700
B. Calculate the cost of goods manufactured.Materials issued to production (part A)$129,700
Direct labor cost incurred52,000
Manufacturing overhead cost applied72,800
Total manufacturing costs254,500
Add: Work in process inventory, beginning26,000
Less: Work in process inventory, ending(22,000)
Cost of Goods Manufacturing$258,500
Because this is job costing and a normal costing system is used, only applied overhead is added to WIP.
Problem 75 -Niebaum Company uses a normal product costing system. Any amount of over or underapplied overhead is material. Niebaum's accounts showed underappliedoverhead of $5,000 at December 31. Other accounts showed the following balances at year end:Raw materials$30,000
Work in process50,000
Finished goods80,000
Sales revenue830,000
Cost of goods sold620,000
Calculate gross profit after the disposal of under or overapplied manufacturing overhead.Sales$830,000
Cost of goods sold:$620,000
Adjustment for underapplied overhead5,000
New cost of goods sold625,000
Gross Profit$205,000
Problem 77 -Dasani, Inc. considers any over or underapplied overhead to be immaterial. The company reported the following amounts for 2006:Raw materials purchased$88,000Beginning work-in-process inventory$17,000
Direct materials used83,000Ending work-in-process inventory19,000
Indirect materials used6,000Selling and administrative expenses incurred16,000
Direct labor used42,000Other manufacturing overhead costs incurred36,000
Indirect direct labor used5,000Beginning finished goods inventory7,000
Manufacturing overhead applied45,000Ending finished goods inventory10,000
A.Calculatetotal manufacturing costsif the company uses an actual costing system.Direct materialsused$83,000
Direct labor cost42,000
Manufacturing overhead:
Indirect materials used6,000
Indirect direct labor used5,000
Other manufacturing overhead costs incurred36,000
Total manufacturing costs$172,000
Note that an actual costing system allocates the actual manufacturing overhead costs directly to WIP.B.Calculate the cost of goods manufactured assuming anormalcosting system.Direct materialsused$83,000
Direct labor cost42,000
Manufacturing overhead applied45,000
Total manufacturing costs$170,000
Add Beginning WIP17,000
Less Ending WIP(19,000)
CGM$168,000
Problem 78 -Winfrey, Inc. manufactures calculators. The company employs a normal costing system and keep all materials in a materials storeroom. Wallaces related transactions for June follow:Direct labor cost incurred$17,800Work in process inventory, beginning$10,200
Materials purchased on account42,500Work in process inventory, ending11,100
Materials purchased for cash11,500Raw materials inventory, beginning1,400
Payment made for materials purchased in May3,300Raw materials inventory, ending1,150
Total manufacturing overhead cost23,500Indirect materials issued to production2,200
How much is the cost of direct materials issued to production during June?Raw materials inventory, beginning$ 1,400
Direct materials purchased ($42,500 + $11,500)54,000
Indirect materials issued(2,200)
Less Raw materials inventory, ending (1,150)
Cost of direct materials issued to production$52,050
Problem 79 -Daniels Manufacturing used 30 hours of direct labor and $340 of direct materials for job 66. Employees are paid $13 per hour. Fringe benefits cost $3 per hour. The overhead rate was calculated at $24 based on direct labor hour. Estimated manufacturing overhead for the year was $52,000. The company expected to complete 60 jobs during the year. How much is the total cost of job 66?Direct materials$ 340
Direct labor: ($13 + $3)*30480
MOH applied: $24*30 DLH720
Total job cost$1,540
Problem 80Salonga Company applies manufacturing overhead based on direct labor dollars. Information for June follows:Direct labor incurred5,100 hours @ $20 = $102,000
Direct labor estimated5,240 hours @ $20 = $104,800
Actual manufacturing overhead$172,920
Estimated manufacturing overhead$178,160
Direct materials incurred$234,000
A. How much is the manufacturing overhead rate? Estimated MOH / Estimated DL$ = $178.160 / $104,800 = $1.70 per DL$Note that both amounts are estimated because this rate is created at the beginning of the accounting period and actual amounts are not know.B. How much overhead did Salonga apply during June?MOH rate * Actual DL$ = $1.70*$102,000 = $173,400C.1.Post all necessary amounts to the t-account in which you would find the amount of over or underapplied overhead at June 30.2. Label the account with the correct name.3. Calculate the balance and label if over or underapplied.Manufacturing Overhead
172,920173,400
480 Overapplied
D.Brieflystate the two reasons that manufacturing overhead isapplied.1-Timely information is needed for decision makingand the actual OH cost is not know until the end of the period.2- It is not feasible nor in other cases possible to trace indirect costs to products or services.
Problem 82 -The accounting records of Cinotti Manufacturing Company include the following information:Dec. 31, 2004Dec. 31, 2003
Work in process inventory$ 15,000$ 12,000
Finished goods inventory 45,000 51,000
Materials purchased 331,000
Raw materials inventory ? 24,000
Direct materials used 325,000
Manufacturing overhead incurred 132,000
Direct labor 120,000
Selling expenses 70,000
Cinotti uses an actual cost system. Calculate the following: A. Raw materials inventory at 12-31-04 B. Total manufacturing costs added to Work in Process Inventory during 2004A. Similar to the calculation of a bank balance--beginning plus increases less decreases equals ending balance.Raw materials inventory, beginning$24,000
Add Materials purchased331,000
Less direct materials used(325,000)
Raw materials inventory, ending$30,000
B. Total manufacturing costs consist of the three manufacturing costs incurred in production which are added to work in process during the year:Direct materials used $325,000
Manufacturing overhead incurred 132,000
Direct labor 120,000
Total manufacturing costs incurred $577,000