PROBLEM
1. Prepare the necessary necessary journal entries from the following following information information for Anderson Anderson Company, Company, which uses a perpetual inventory system. s ystem. a. ". c. d. e. f. g.
Purcha Purchased sed raw materi material al on on accou account, nt, $56 $56,! ,!!. !. #euisitioned raw material material for production as follows% follows% direct material&'! material&'! percent of purchases( indirect material&15 material&15 percent of purchases. purchases. )irect )irect la"or la"or wages wages of $**,1! $**,1!! ! are accrued accrued as are indirect indirect la"or la"or wages wages of of $1+,5!!. $1+,5!!. verhe verhead ad incu incurred rred and paid paid for for is is $66,$66,-!!. !!. verhead verhead is applied applied to produ production ction "ased "ased on 11! 11! percen percentt of direct direct la"or la"or cost. cost. oods oods costi costing ng $-,6 $-,6!! !! were were comple completed ted duri during ng the the period. period. oods oods costing costing $51,*+! $51,*+! were were sold sold on accoun accountt for for $,6!!. $,6!!.
+. #ichards Company employs a jo" order costing system. system. nly three three jo"s&/o" jo"s&/o" 0+!5, /o" 0+!6, and /o" 0+!&were wored on during /anuary and 2e"ruary. /o" 0+!5 was completed 2e"ruary 1!( the other two jo"s were still in production on 2e"ruary +', the end of the company3s operating year. /o" cost sheets on the three jo"s follow% /o" Cost 4heet /o" 0+!6
/o" 0+!5 /anuary costs incurred% )irect material )irect la"or anufacturing overhead 2e"ruary costs incurred% )irect materials )irect la"or anufacturing overhead
/o" 0+!
$1 6 ,50 0
$ 9 ,30 0
1 3 ,00 0
7,000
—
2 0 ,80 0
11,200
—
— 4 4, ,00 0 ?
$
—
8,200
21,300
6 , 000
10 ,0 00
?
?
he following additional information is availa"le% a.
anufacturi anufacturing ng overhea overhead d is assign assigned ed to jo"s jo"s on the "asis "asis of of direct direct la"or la"or cost. cost.
".
7alances in the inventory inventory accounts at /anuary *1 were were as follows% #aw aterial 8or in Process 2inished oods
$40,000 ? 85,000
Required: a. Prepare Prepare &a &accoun ccounts ts for #aw ateria aterial, l, 8or 8or in Process Process 9nventory 9nventory,, 2inished 2inished oods oods 9nventory, 9nventory, and anufacturing verhead Control. :nter the /anuary *1 inventory "alances given previously( previously( in the case of 8or 8or in Process Process 9nventory, 9nventory, compute the /anuary *1 "alance and enter it into the 8or in Process 9nventory &account.
". 1.
Prepare journal entries for February as follows% Prepar Preparee an entry entry to to record record the the issue issue of of materi materials als into into produc productio tion n and pos postt the entry entry to appropriate &accounts &accounts.. ;9n the case of direct material, it is not necessary to mae a separate entry for each jo".< 9ndirect materials used during during 2e"ruary totaled $=,!!!. $=,!!!.
+.
Prepar Preparee an entry entry to recor record d the incur incurren rence ce of la"or la"or cost cost and and post post the the entry entry to appro appropri priate ate & & accounts. ;9n the case of direct la"or, it is not necessary to mae a separate entry for each jo".< 9ndirect la"or cost totaled $',!!! for 2e"ruary.
*.
Prepare Prepare an an entry entry to record record the the incurre incurrence nce of $1-,! $1-,!!! !! in in variou variouss actual actual manufactur manufacturing ing overhead overhead costs for 2e"ruary ;credit Accounts Paya"le<.
c.
8hat apparen apparentt predetermi predetermined ned overhead overhead rate rate does does the company company use use to assign assign overhe overhead ad cost to jo"s> ?sing this rate, rate, prepare a journal entry to record record the application of of overhead cost to jo"s for 2e"ruary ;it is not necessary to mae a separate entry for each jo"<. Post this entry to appropriate &accounts.
d.
As stated stated earlier, earlier, /o" /o" 0+!5 was was completed completed during during 2e"ruary 2e"ruary.. Prepare Prepare a journal journal entry to to show the transfer of this jo" off of the production line and into the finished good warehouse. Post the entry to appropriate &accounts &accounts..
e.
)etermine )etermine the "alanc "alancee at 2e"ruary 2e"ruary +' in in the 8or 8or in Process Process invento inventory ry account. account. @ow much of this "alance consists of the cost of /o" 0+!6> /o" 0+!>
*. he Pittman Pittman Company Company manufactures manufactures special special purpose purpose machines machines to to order. order. n /anuary /anuary 1, 1, there were were two jo"s in process, 0!5 0!5 and 0!6. he following following costs were applied applied to these jo"s in the prior year% /o" o. )irect material )irect la"or verhead otal
!5
!6
$ 5, 000
$ 8, 00 0
4, 4,000
3,0 0 0
4, 4,400
3,3 0 0
$1 3, 400
$ 14, 30 0
)uring /anuary, the following transactions too place% B B
#aw mate materia riall costi costing ng $=!,! $=!,!!! !! was was purc purcha hased sed on on accou account. nt. /o"s 0!, 0!, 0!', 0!', and and 0!0!- were were started started and and the the followin following g costs costs were were applied applied to them%
)irect materials )irect la"or B B B B B B B
!
/7 !'
!-
$ 3 , 000
$1 0,0 00
$ 7,0 00
5,000
6,000
4,000
/o" 0!5 0!5 and /o" 0!6 0!6 were were completed completed after incurring additional direct la"or costs of $+,!!! and $=,!!!, respectively 8ages 8ages paid to production employees during /anuary totaled $+5,!!!. )epreciation for the month of /anuary totaled $1!,!!!. ?tilities "ills in the amount of $1!,!!! $1!,!!! were paid for operations operations during during )ecem"er. )ecem"er. ?tilities ?tilities "ills totaling totaling $1+,!!! $1+,!!! were were receiv received ed for for /anuary /anuary operation operations. s. 4upplies costing $+,!!! were used. iscellaneous overhead epenses totaled $+=,!!! for /anuary. /anuary.
Actual overhead is applied to individual jo"s at the end of each month using a rate "ased on actual direct la"or costs. Required:
a.
)eterm )etermine ine the /anuar /anuary y overhe overhead ad rate. rate.
".
)etermine the cost of each jo". jo".
c.
Prepare Prepare a stat stateme ement nt of cost cost of of goods goods manuf manufact acture ured. d.
=. he 8estern 8estern Corporation, "egan operations operations on cto"er 1. 9t employs employs a jo" order costing costing system. system. verhead is charged at a normal rate of $+.5! per direct la"or hour. he actual operations for the month of cto"er are summariDed as follows% a.
Purcha Purchases ses of raw raw mater material ial,, +5,!!! +5,!!! piece piecess E $1.+!F $1.+!Fpie piece. ce.
".
aterial and la"or costs charged charged to production% production%
c.
/o" o.
?nits
aterial
)irect la"or cost
10 1 10 2 10 3 10 4 10 5
1 0,0 00 8,800 16,000 8,000 20,000
$4 ,00 0 3,600 7,000 3,200 8,000
$6, 000 5, 400 9, 000 4, 800 3, 600
)irect la"or hours 3, 0 00 2, 7 00 4, 5 00 2, 4 00 1, 8 00
Actu Actual al ove overh rhea ead d cost costss incu incurre rred% d% Garia"le 2ied
$18,500 15,000
d.
Comple Completed ted jo"s% jo"s% 1!1 1!1,, 1!+ 1!+,, 1!* 1!*,, and 1!=
e.
4ales&$1!5 4ales&$1!5,!!!. ,!!!. All All units units produce produced d on /o"s /o"s 1!1, 1!1, 1!+, 1!+, and 1!* 1!* were sold. sold.
following "alances on cto"er *1% *1% Required: Compute the following a.
at ateri erial inv inven ento tory ry
".
8or 8or in process inventory
c.
2ini 2inish shed ed goo goods ds inv inven ento tory ry
d.
Cos Cost of of go goods ods sol sold d
e.
?nde ?nder& r& or or over overap appl plie ied d over overhe head ad
Steel Company.
4teel Company uses a jo" order costing system and develops its predetermined overhead rate "ased on machine hours. he company has two jo"s in process at the end of the c ycle, /o"s 01 and 01-. 7udgeted overhead
$100,300
85,000
7udgeted machine hours #aw material Ha"or cost
$ 63,000 $ 50,000
5. #efer to 4teel 4teel Company. Company. 8hat amount of overhead is charged to /o"s 01 and 01-> achine hours are split "etween /o"s 01 and 01-&65 percent and *5 percent, respectively. Actual Actual machine hours eual "udgeted machine hours. 6. #efer to 4teel Company. Company. 2ifty&four percent percent of raw material material "elongs to /o" 1 and *' percent "elongs to /o" 1-, and the "alance is considered indirect material. 8hat amount of raw material used was allocated to overhead as indirect material> . #efer to 4teel 4teel Co. Ha"or cost was split +5 percent and ! percent, respectively, respectively, "etween /o"s 01 and 01- for direct la"or. he remainder was indirect la"or cost. 8hat are the total costs of /o"s 01 and 01-> '. 4anderson 4anderson Company Company manufactur manufactures es custom&"uil custom&"uiltt conveyor conveyor systems systems for factory and commercial commercial operations. :rin 4mith is the cost accountant for 4anderson and she is in the process of educating a new employee, @eather 2ontenot a"out the jo" order costing system that 4anderson uses. ;he system is "ased on normal costs( overhead is applied "ased on direct la"or cost and rounded to the net whole dollar.< dollar.< Hisa gathers the following jo" order cost records records for /uly%
/o" o.
)irect aterials
)irect Ha"or
Applied @
otal Cost
66 7 66 9 67 0 67 1 67 2
$ 5,90 1 1 8,31 2 40 6 5 1,40 5 9,61 5
$1, 730 1,810 500 9,500 550
$ 1, 9 90 2,082 575 10,925 633
$ 9 ,62 1 22 ,20 4 1 ,48 1 71 ,83 0 10 ,798
o eplain the missing jo" num"er, :rin informed @eather that /o" 066' had "een completed in /une. 4he also told her that /o" 066 was the only jo" in process at the "eginning of /uly. At At that time, the jo" had "een assigned $=,*!! for direct material and and $-!! for direct la"or. la"or. At At the end of /uly, /uly, /o" 061 had not "een completed( all others had. :rin ased @eather several uestions to determine whether she understood the jo" order system. s ystem. answer the following following uestions% uestions% Required: @elp @eather answer a.
8hat is the the predet predetermin ermined ed overhea overhead d rate rate used used "y A7C Company> Company>
".
8hat was the total cost cost of "eginning 8or 8or in Process Process inventory>
c.
8hat 8hat was total total prim primee cost incu incurre rred d for the the month month of /uly /uly>>
d.
8hat 8hat was was cost cost of of goods goods m manu anufac factur tured ed for for /uly> /uly>
-. Perry Company uses a jo" jo" order costing costing system system and has the following following information information for the first wee of /une% 1.
)irect )irect la"or la"or and and dire direct ct mate materia rials ls used used%% /o" o.
)irect aterial
)irect Ha"or @ours
4 98 506
$ 1 , 500 960
1 16 16
507 508 509 511 512 T o ta l
415 345 652 308 835 $5 ,01 5
18 42 24 10 30 256
+.
he direc directt la"or la"or wage wage rate rate is is $= per hou hour. r.
*.
he over overhea head d rate rate is is $5 per per dire direct ct la"o la"orr hour. hour.
=.
Actual Actual over overhea head d costs costs for the the wee wee,, $1,=' $1,='!. !.
5.
/o"ss comp /o" complet leted% ed% os. os. =-', =-', 5!6, 5!6, and 5!5!-..
6.
he factory factory had no no wor wor in process process at the "egin "eginning ning of the the wee. wee.
Required: a. Prepare Prepare a summary summary that will show the total total cost assigned assigned to each each jo". jo".
".
Compute the amount of overhead overhead over& or underapplied underapplied during the wee. wee.
c.
Calculate Calculate the cost cost of of the wor in proces processs at the end end of the the wee. wee.
1!. Iou Iou are ased to "ring the following following incomplete incomplete accounts of Andrepont Andrepont Printing, 9nc. up up to date through /anuary *1,+!J5. Consider the data that appear in the &accounts &accounts as well as additional information given in items ;a< through ;i<. AndrepontKs AndrepontKs jo" order costing system s ystem has two direct cost categories ;direct material and direct manufacturing la"or< and one indirect cost pool ;manufacturing overhead, which is allocated using direct manufacturing la"or costs<. Materials Inventory Control 1+F*1F+!J= 7alance 15,!!!
or% in Pro#ess Inventory Control
a!es Payable Control 1F*1F+!J5 7alance *,!!!
Manu"a#turin! $epartment Over&ead Control /anuary +!J5 Charges 5,!!!
Manu"a#turin! Over&ead Control
Finis&ed 'oods Inventory Control 1+F*1F+!J= 7alance +!,!!!
Additional Information: Information:
Cost o" 'oods Sold
a.
".
c. d. e. f. g. h. i.
anufacturi anufacturing ng departme department nt overhead overhead is is allocated allocated using using a "udget "udgeted ed rate set set every )ecem"er. anagement forecasts net year3s overhead and net year3s direct manufacturing la"or costs. he "udget for +!J5 is $=!!,!!! of direct manufacturing la"or and $6!!,!!! of manufacturing overhead. he only jo" unfinished unfinished on /anuary *1, +!J5 is is o. =1-, on which direct direct manufacturing la"or costs are $+,!!! ;1+5 direct manufacturing la"or hours< and direct material costs are $',!!!. otal otal material material placed placed into into producti production on during during /anuary /anuary is $-!,!!! $-!,!!!.. Cost Cost of goods goods comp complet leted ed durin during g /anuary /anuary is $1'!, $1'!,!!! !!!.. ateri aterial al inven inventor tory y as of of /anuary /anuary *1, +!J5 +!J5 is is $+!,!! $+!,!!!. !. 2inis 2inished hed goods goods inve invent ntory ory as as of /anuary /anuary *1, +!J5 +!J5 is is $15,!! $15,!!!. !. All plant plant worers worers earn earn the same same wage rate. rate. )irect )irect manufac manufacturin turing g la"or la"or hours hours for /anuary totals +,5!!. ther la"or and supervision totals $1!,!!!. he gross gross plant plant payroll payroll on /anuary /anuary paydays paydays totals totals $5+,!!!. $5+,!!!. 9gnore 9gnore withho withholdin ldings. gs. All All personnel are paid on a weely weely "asis. All Lactua LactualL lL manufac manufacturin turing g departme department nt overhea overhead d incurred incurred during during /anuary /anuary has already already "een posted.
#euired% a. ater ateria iall purc purcha hase sed d duri during ng /an /anua uary ry ". Cost of oods 4old during during /anuary c. )irect )irect anuf anufact acturi uring ng Ha"or Ha"or Costs Costs incurr incurred ed during during /anua /anuary ry d. anufa anufactu cturin ring g verhea verhead d Alloc Allocate ated d during during /anuary /anuary e. 7alanc 7alance, e, 8ag 8ages es Paya"l Paya"lee Contro Control, l, )ecem" )ecem"er er *1, +!J= +!J= f. 7alance, 7alance, 8or 8or in in Proces Processs 9nvent 9nventory ory Control, Control, /anuary /anuary *1, +!J5 g. 7alance, 7alance, 8o 8or in Process Process 9nvent 9nventory ory Contro Control, l, )ecem"er )ecem"er *1, +!J= +!J= h. 7alance, 7alance, 2inish 2inished ed oods oods 9nventory 9nventory Control, Control, /anuary /anuary *1, *1, +!J5 +!J5 i. anufa anufactu cturin ring g verhea verhead d underap underappl plied ied or overap overappli plied ed for /anuary /anuary
