ACTG 2010 : Chapter 3 Tutorial Solution_Jan 17.pdf

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18 Jun 2014

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Prepare job-order cost sheets for jobs 17, 18, and 19. Post the beginning inventory data, and then update the cost sheets for the july activity. First, we need to determine the oh rate (see p. 2). We are told that oh is applied on the basis of dl. This is normal costing with a predetermined oh rate. Typically, the rate is the same for every month during a given year (because it is based on the budgeted amount of oh and the budgeted amount of, in this case, dl for the year). Therefore, we will make the reasonable (and, in this case, only possible) assumption that the rate applied in july is the same as the rate applied in june. Therefore, we can obtain the pohr by using the job costs in the wip inventory. For any job, the rate is equal to the job"s applied overhead cost divided by its dl cost.

Related Questions

Job-Order Cost Sheets, Balance in Work in Process andFinished Goods

Prull Company, a job-order costing firm, worked on three jobs inJuly. Data are as follows:

	Job86	Job87	Job88
Balance, July 1	$21,370	$6,280	$0
Direct materials	$10,510	$12,350	$16,190
Direct labor	$16,040	$12,240	$24,030
Machine hours	500	290	980

Overhead is applied to jobs at the rate of $17 per machine hour.By July 31, Jobs 86 and 88 were completed. Jobs 82 and 86 weresold. Job 87 remained in process. On July 1, the balance inFinished Goods was $49,010 (consisting of Job 82 for $25,580 andJob 84 for $23,430).

Prull prices its jobs at cost plus 30%. During July, variablemarketing expenses were 4% of sales, and fixed marketing expenseswere $2,020; administrative expenses were $4,800. (Round allamounts to the nearest dollar.)

	Required:
1.	Prepare job-order cost sheetsfor all jobs in process during July, showing all costs through July31.
2.	Calculate the balance in Workin Process on July 31.
3.	Calculate the balance inFinished Goods on July 31.
4.	Calculate Cost of Goods Soldfor July.
5.	Calculate operating income forPrull Company for the month of July.

Pedriani Company uses a job order cost system and applies overhead to production on the basis of direct labor hours. On January 1, 2017, Job No. 25 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $10,000; direct labor $6,000; and manufacturing overhead $9,000. Job No. 23 had been completed at a cost of $42,000 and was part of finished goods inventory. There was a $5,000 balance in the Raw Materials Inventory account.

During the month of January, the company began production on Jobs 26 and 27, and completed Jobs 25 and 26. Jobs 23 and 25 were sold on account during the month for $63,000 and $74,000, respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $45,000 on account.

2. Incurred factory labor costs of $33,500. Of this amount, $7,500 related to employer

payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirect materials $10,000;

indirect labor $9,500; depreciation expense on equipment $12,000; and various

other manufacturing overhead costs on account $11,000.

4. Assigned direct materials and direct labor to jobs as follows.

Job No.	Direct Materials	Direct Labor
25	$ 5,000	$ 3,000
26	17,000	12,000
27	13,000	9,000

5. The company uses direct labor hours as the activity base to assign overhead. Direct labor hours incurred on each job were as follows: Job No. 25, 200; Job No. 26, 800; and Job No. 27, 600.

Instructions

(a) Calculate the predetermined overhead rate for the year 2017, assuming Pedriani Company estimates total manufacturing overhead costs of $440,000, direct labor costs of $300,000, and direct labor hours of 20,000 for the year.

(b) Open job cost sheets for Jobs 25, 26, and 27. Enter the January 1 balances on the job cost sheet for Job No. 25.

(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.

(d) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.

(e) Job 25, $37,400

Job 26, $46,600

(e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.

(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month.

(g) What is the balance in the Work in Process Inventory account at the end of the month? What does this balance consist of?

(h) What is the amount of over- or underapplied overhead?

byzantiummanatee604

Nixon Company uses a job order cost system and applies overheadto production on the basis of direct laborcost. On January 1, 2014, Job No. 50 was the only jobin process. The costs incurred prior to January 1 on this job wereas follows: direct materials $25,000; direct labor $15,000; andmanufacturing overhead $20,000. Job No. 49 had been completed at acost of $85,000 and was part of finished goods inventory. There wasa $22,000 balance in the Raw Materials inventory account.

During themonth of January, the company began production on Jobs 51 and 52,and completed Jobs 50 and 51. Jobs 49 and 50 were sold on accountduring the month for $118,000 and $125,000, respectively. Thefollowing additional events occurred during the month.

1. Purchased additional raw materials of $200,000 onaccount.

2. Incurred factory labor costs of $41,000. Of this amount$11,000 is related to employer payroll taxes.

3. Incurred manufacturing overheadcosts as follows: indirect materials $3,000; indirect labor $12000;depreciation expense $19,000.

4. Assigned direct materials anddirect labor to jobs as follows.

JobNo. DirectMaterials Direct Labor

50 $8,000 $ 6,000

51 23,000 14,000

52 20,000 11,000

5. The company usesdirect labor cost as the activity base toassign overhead.

Instructions

(a) Calculate thepredetermined overhead rate for the year 2014, assuming Proctor& Gamble Company Manufacturing estimates total manufacturingoverhead costs of $750,000, direct labor costs of $200,000, anddirect labor hours of 25,000 for the year.

(b) Open job cost sheets for Jobs 50,51, and 52. Enter the January 1 balances on the job cost sheet forJob No. 50. (This can be done also when you get to parts d. ande.)

(c) Prepare the journal entries torecord the purchase of raw materials, the factory labor costsincurred, and the manufacturing overhead costs incurred during themonth of January.

(d) Prepare the journal entries torecord the assignment of direct materials, direct labor, andmanufacturing overhead costs to production. In assigningmanufacturing overhead costs, use the overhead rate calculated in(a). Post all costs to the job cost sheets as necessary.

(e) Total the job cost sheets for Job50 and Job 51 that were completed during the month. Prepare thejournal entry to record the completion of these jobs during themonth.

(f) Prepare the journal entries torecord the sale of Job 49 and Job 50 during the month.

(g) What is the balance in theWork in Process Inventory account at the end of the month?What does this balance consist of? (For example which Job and whatspecific costs.)

(h) What is the amount of over- orunderapplied overhead for the month?

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ACTG 2010 : Chapter 3 Tutorial Solution_Jan 17.pdf

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