Analyzing Manufacturing Cost Accounts
Big Wave Company manufactures surf boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for July:
Materials July 1 Balance 36,400 July 31 Requisitions (A) July 31 Purchases 146,400
Work in Process July 1 Balance (B) July 31 Completed jobs (F) July 31 Materials (C) July 31 Direct labor (D) July 31 Factory overhead applied (E)
Finished Goods July 1 Balance 0 July 31 Cost of goods sold (G) July 31 Completed jobs (F)
Wages Payable July 31 Wages incurred 116,300
Factory Overhead July 1 Balance 21,700 July 31 Factory overhead applied (E) July 31 Indirect labor (H) July 31 Indirect materials 19,500 July 31 Other overhead 58,700
In addition, the following information is available:
Materials and direct labor were applied to six jobs in July:
Job No. Style Quantity Direct Materials Direct Labor No. 21 X-10 200 $25,600 $15,000 No. 22 X-20 390 40,620 26,000 No. 23 X-50 170 14,500 7,000 No. 24 T-20 250 39,250 25,000 No. 25 X-40 180 26,380 16,000 No. 26 T-10 130 9,390 4,000 Total 1,320 $155,740 $93,000
Factory overhead is applied to each job at a rate of 130% of direct labor cost.
The July 1 Work in Process balance consisted of two jobs, as follows:
Job No. Style Work in Process, July 1 Job 21 X-10 $5,900 Job 22 X-20 15,800 Total $21,700
Customer jobs completed and units sold in July were as follows:
Job No. Style Completed in July Units Sold in July No. 21 X-10 X 160 No. 22 X-20 X 312 No. 23 X-50 0 No. 24 T-20 X 210 No. 25 X-40 X 149 No. 26 T-10 0
1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers.
Job No. Quantity July 1
Work in
Process Direct
Materials Direct
Labor Factory
Overhead Total Cost Unit Cost Units Sold Cost of Goods Sold No. 21 $ 5,900 $ 25,600 $ 15,000 $ $ $ $ No. 22 15,800 40,620 26,000 No. 23 14,500 7,000 No. 24 39,250 25,000 No. 25 26,380 16,000 No. 26 9,390 4,000 Total $21,700 155,740 93,000 $ $ $
a. Materials Requisitions $
b. Work in Process Beginning Balance $
c. Direct Materials $
d. Direct Labor $
e. Factory overhead applied $
f. Completed jobs $
g. Cost of goods sold $
h. Indirect labor $
2. Determine the July 31 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances.
Materials: $ Work in Process: $ Finished Goods: $ Factory Overhead: $
Feedback
1
a & c. Direct and Indirect materials are requisitioned. Direct materials are recorded in Work in Process and Indirect materials are recorded in Factory overhead.
b. The beginning work in process information is given.
d, e & h. Direct labor cost information is given. Overhead is applied based on direct labor cost.
f & g. Beginning Work in Process balances plus all current period manufacturing costs are included in the cost of completed jobs and jobs sold.
2. Insert your amounts calculated in (1) into the T accounts. Then determine the ending balances.
Learning Objective 2.
Analyzing Manufacturing Cost Accounts
Big Wave Company manufactures surf boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for July:
Materials | |||||
---|---|---|---|---|---|
July 1 | Balance | 36,400 | July 31 | Requisitions | (A) |
July 31 | Purchases | 146,400 |
Work in Process | |||||
---|---|---|---|---|---|
July 1 | Balance | (B) | July 31 | Completed jobs | (F) |
July 31 | Materials | (C) | |||
July 31 | Direct labor | (D) | |||
July 31 | Factory overhead applied | (E) |
Finished Goods | |||||
---|---|---|---|---|---|
July 1 | Balance | 0 | July 31 | Cost of goods sold | (G) |
July 31 | Completed jobs | (F) |
Wages Payable | |||||
---|---|---|---|---|---|
July 31 | Wages incurred | 116,300 | |||
Factory Overhead | |||||
---|---|---|---|---|---|
July 1 | Balance | 21,700 | July 31 | Factory overhead applied | (E) |
July 31 | Indirect labor | (H) | |||
July 31 | Indirect materials | 19,500 | |||
July 31 | Other overhead | 58,700 |
In addition, the following information is available:
Materials and direct labor were applied to six jobs in July:
Job No. | Style | Quantity | Direct Materials | Direct Labor | ||||||||
No. 21 | X-10 | 200 | $25,600 | $15,000 | ||||||||
No. 22 | X-20 | 390 | 40,620 | 26,000 | ||||||||
No. 23 | X-50 | 170 | 14,500 | 7,000 | ||||||||
No. 24 | T-20 | 250 | 39,250 | 25,000 | ||||||||
No. 25 | X-40 | 180 | 26,380 | 16,000 | ||||||||
No. 26 | T-10 | 130 | 9,390 | 4,000 | ||||||||
Total | 1,320 | $155,740 | $93,000 |
Factory overhead is applied to each job at a rate of 130% of direct labor cost.
The July 1 Work in Process balance consisted of two jobs, as follows:
Job No. | Style | Work in Process, July 1 | |||
Job 21 | X-10 | $5,900 | |||
Job 22 | X-20 | 15,800 | |||
Total | $21,700 |
Customer jobs completed and units sold in July were as follows:
Job No. | Style | Completed in July | Units Sold in July | |
No. 21 | X-10 | X | 160 | |
No. 22 | X-20 | X | 312 | |
No. 23 | X-50 | 0 | ||
No. 24 | T-20 | X | 210 | |
No. 25 | X-40 | X | 149 | |
No. 26 | T-10 | 0 |
1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers.
Job No. | Quantity | July 1 Work in Process | Direct Materials | Direct Labor | Factory Overhead | Total Cost | Unit Cost | Units Sold | Cost of Goods Sold | ||||||||
No. 21 | $ 5,900 | $ 25,600 | $ 15,000 | $ | $ | $ | $ | ||||||||||
No. 22 | 15,800 | 40,620 | 26,000 | ||||||||||||||
No. 23 | 14,500 | 7,000 | |||||||||||||||
No. 24 | 39,250 | 25,000 | |||||||||||||||
No. 25 | 26,380 | 16,000 | |||||||||||||||
No. 26 | 9,390 | 4,000 | |||||||||||||||
Total | $21,700 | 155,740 | 93,000 | $ | $ | $ |
a. Materials Requisitions $
b. Work in Process Beginning Balance $
c. Direct Materials $
d. Direct Labor $
e. Factory overhead applied $
f. Completed jobs $
g. Cost of goods sold $
h. Indirect labor $
2. Determine the July 31 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances.
Materials: | $ |
Work in Process: | $ |
Finished Goods: | $ |
Factory Overhead: | $ |
Feedback
1
a & c. Direct and Indirect materials are requisitioned. Direct materials are recorded in Work in Process and Indirect materials are recorded in Factory overhead.
b. The beginning work in process information is given.
d, e & h. Direct labor cost information is given. Overhead is applied based on direct labor cost.
f & g. Beginning Work in Process balances plus all current period manufacturing costs are included in the cost of completed jobs and jobs sold.
2. Insert your amounts calculated in (1) into the T accounts. Then determine the ending balances.
Learning Objective 2.