ACCOUNTG 222 Study Guide - Midterm Guide: Sunk Costs, Fixed Cost, Radiography

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crimsonwoodchuck658

27 Feb 2014

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Manufacturing costs: direct materials - are those materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product, raw materials - materials that go into the final product. Any materials that are used in the final product; and the finished product of one company can become the raw materials of another company. Just like indirect materials, indirect labor is treated as part of manufacturing overhead: manufacturing overhead - all manufacturing costs except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. Only those costs associated with operating the factory are included in manufacturing overhead. Nonmanufacturing costs (selling and administrative costs: selling costs - all costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.

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Required information

[The following information applies to the questions displayed below.]

Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories

	Beginning Inventory		Ending Inventory
Raw materials inventory	$	65,000	$	77,000
Work in process inventory		441,500		555,000
Finished goods inventory		632,000		517,000

The following additional information describes the company's production activities for May.


Raw materials purchases (on credit)	$	250,000
Factory wages cost (paid in cash)		1,562,000
Other overhead cost (Other Accounts credited)		38,000
Materials used
Direct	$	158,000
Indirect		80,000
Labor used
Direct	$	800,000
Indirect		762,000
Overhead rate as a percent of direct labor		110	%
Sales (on credit)	$	3,500,000

The predetermined overhead rate was computed at the beginning of the year as 110% of direct labor cost.

1. Compute the cost of products transferred from production to finished goods and cost of goods sold.

Raw Materials (RM)	Work in Process (WIP)






Factory Wages Payable	Finished Goods (FG)





Factory Overhead	Income Statement (Partial)


		$0


	Cost of goods transferred
	Cost of goods sold

ceriseplatypus220

Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4

[The following information applies to the questions displayed below.]

Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $381,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $25,000; factory rent, $31,000; factory utilities, $24,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $650,000 cash in April. Costs of the three jobs worked on in April follow.

	Job 306			Job 307			Job 308
Balances on March 31
Direct materials		$	28,000		$	36,000
Direct labor			24,000			15,000
Applied overhead			12,000			7,500
Costs during April
Direct materials			139,000			205,000		$	100,000
Direct labor			103,000			152,000			101,000
Applied overhead			?			?			?
Status on April 30	Finished (sold)			Finished (unsold)				In process

rev: 03_15_2018_QC_CS-121813

Problem 15-1A Part 1

Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).

	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	$28,000	$36,000		$64,000
Direct Labor	24,000	15,000		39,000
Applied overhead	12,000	7,500		19,500
Beginning goods in process
For April
Direct Materials	139,000	205,000	100,000	444,000
Direct Labor	103,000	152,000	101,000	356,000
Applied overhead
Total costs added in April
Total costs (April 30)
Status on April 30	Finished (sold)	Finished (unsold)	In process
April 30 cost included in:

Problem 15-1A Part 2

Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Problem 15-1A Part 3

3. Prepare a schedule of cost of goods manufactured.

MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Total manufacturing costs
Total cost of work in process
Cost of goods manufactured

crimsonturtle112

Problem 4

Prepare journal entries to reflect the following transactionsfor a textile company.After you complete the entries, determine theamount to include in raw materials, work in process, and finishedgoods.

May 7, 20X7	Purchased fabric to be used in the manufacturing process. Thepurchase price was $7,000, on account.
May 11, 20X7	Transferred 70% of the raw materials purchases on May 7 intoproduction.
May 11, 20X7	Incurred direct labor cost of $4,200.Factory overhead is appliedat 30% of the direct labor cost.
May 12, 20X7	Transferred completed product with total assigned costs of$5,700 to finished goods.
May 13, 20X7	Sold and delivered half of the finished goods (from May 12) to acustomer for $9,000 cash.

WORKSHEET #4

GENERAL JOURNAL
Date	Accounts	Debit	Credit
5-7-X7

	To record purchase of raw materials.

5-11-X7



	To transfer raw materials to production, record direct laborcost on job, and apply overhead at the predetermined rate.

5-12-X7

	To transfer completed units to finished goodsinventory.

5-13 X7

	To record sale of finished product for $9,000.

5-13-X7

	To transfer finished goods to cost of goods sold.

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ACCOUNTG 222 Study Guide - Midterm Guide: Sunk Costs, Fixed Cost, Radiography

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