Managerial Accounting 1B Ch15

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Managerial Accounting 1B

Financial and Managerial Accounting

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Chapter 15

1.

Exercise 15-4 Analysis of cost flows L.O. C2, P1, P2, P3

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.

Job 102

Job 103

Job 104

Direct materials

$ 30,000

$ 66,000

$ 54,000

Direct labor

16,000

28,400

42,000

Overhead

8,000

14,200

21,000

Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $12,000; direct labor, $3,600; and overhead, $1,800. Jobs 103 and 104 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 are finished in June, and Job 104 is expected to be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months).

1.

What is the cost of the raw materials requisitioned in June for each of the three jobs?(Omit the “$” sign in your response.)

Job 102

Job 103

Job 104

2.

How much direct labor cost is incurred during June for each of the three jobs?(Omit the “$” sign in your response.)

3.

What predetermined overhead rate is used during June?(Omit the “%” sign in your response.)

Predetermined overhead rate

4.

How much total cost is transferred to finished goods during June?(Omit the “$” sign in your response.)

Total transferred cost

$

2.

Exercise 15-6 Analysis of costs assigned to goods in process L.O. P3

Lopez Company uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following.

Date

Explanation

Debit

Credit

Balance

2011

Dec. 31

Direct materials cost

1,500,000

1,500,000

31

Direct labor cost

240,000

1,740,000

31

Overhead costs

450,000

2,190,000

31

To finished goods

2,100,000

90,000

1.

Determine the overhead rate used (based on direct material cost).(Omit the “%” sign in your response.)

2.

Only one job remained in the goods in process inventory at December 31, 2011. Its direct materials cost is $30,000. How much direct labor cost and overhead cost are assigned to it?(Omit the “$” sign in your response.)

3.

Exercise 15-7 Cost flows in a job order cost system L.O. P1, P2, P3, P4

The following information is available for Lock-Down Company, which produces special-order security products and uses a job order cost accounting system.

Compute the following amounts for the month of May. (Input all amounts as positive values. Omit the “$” sign in your response.)

1.

Cost of direct materials used.

2.

Cost of direct labor used.

3.

Cost of goods manufactured.

4.

Cost of goods sold.*

5.

Gross profit.

6.

___________________

4.

Exercise 15-8 Journal entries for materials L.O. P1

The following information is available for Lock-Down Company, which produces special-order security products and uses a job order cost accounting system.

1.

Raw materials purchases for cash.

2.

Direct materials usage.

3.

Indirect materials usage.

Prepare journal entries for the above events for the month of May. (Omit the “$” sign in your response.)

5.Exercise 15-9 Journal entries for labor L.O. P2

The following information is available for Lock-Down Company, which produces special-order security products and uses a job order cost accounting system.

1.

Factory payroll costs in cash.

2.

Direct labor usage.

3.

Indirect labor usage.

Prepare journal entries for the above events for the month of May. (Omit the “$” sign in your response.)

6.Exercise 15-10 Journal entries for overhead L.O. P3

The following information is available for Lock-Down Company, which produces special-order security products and uses a job order cost accounting system.

1.

Factory overhead excluding indirect materials and indirect labor (record credit to Other Accounts).

2.

Application of overhead to goods in process.

Prepare journal entries for the above events for the month of May. (Omit the “$” sign in your response.)

7.Exercise 15-11 Adjusting factory overhead L.O. P4

The following information is available for Lock-Down Company, which produces special-order security products and uses a job order cost accounting system.

Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.(Omit the “$” sign in your response.)

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

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

Winfrey Co.’s March 31 inventory of raw materials is $150,000. Raw materials purchases in April are $400,000, and factory payroll cost in April is $220,000. Overhead costs incurred in April are: indirect materials, $30,000; indirect labor, $14,000; factory rent, $20,000; factory utilities, $12,000; and factory equipment depreciation, $30,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $380,000 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

$

14,000

$

18,000

Direct labor

18,000

16,000

Applied overhead

9,000

8,000

Costs during April

Direct materials

100,000

170,000

$

80,000

Direct labor

30,000

56,000

120,000

Applied overhead

?

?

?

Status on April 30

Finished (sold)

Finished (unsold)

In process

8. 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).(Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response. )

9.

Problem 15-1A Part 2

a.

Materials purchases (on credit), factory payroll (paid in cash), and actual overhead costs including indirect materials and indirect labor. (Factory rent and utilities are paid in cash.)

b.

Assignment of direct materials, direct labor, and applied overhead costs to the Goods in Process Inventory.

c.

Transfer of Jobs 306 and 307 to the Finished Goods Inventory.

d.

Cost of goods sold for Job 306.

e.

Revenue from the sale of Job 306.

f.

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.(Omit the “$” sign in your response.)

10.Problem 15-1A Part 3

3.

Prepare a manufacturing statement for April (use a single line presentation for direct materials and show the details of overhead cost.)(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

11.Problem 15-1A Part 4

4.1

Compute gross profit for April.(Omit the “$” sign in your response.)

Gross profit

4.2

Show how to present the inventories on the April 30 balance sheet.(Omit the “$” sign in your response.)

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