COST ACCOUNTING 9TH EDITION

Chapter 3

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CHAPTER 3 Exercises
1. Manufacturing Costs 1 FOH Rate to Direct Labour Direct Labour= 800000 FOH = 640000 FOH Rate= 80%

Work in Process Ending = Less Direct Labour= FOH 80% of Labour Direct Material Cost

140000 50000 40000 90000 50000

2. Manufacturing Costs Direct Material Cost= Direct Labour Cost= FOH Costs Indirect Labour= 80000 Indirect Material= 20000 Other FOH= 124000 Total Manufacturing Costs= FOH Rate=FOH/DL Rate of Direct Labour = Closing Finished Goods= Less Direct Material Cost= Conversion cost= Labour Cost= FOH Cost Working TMC=DM+Dl+OH TMC=DM+CC CC=DL+FOH 170=100+70 DL=136000/170*100=95200 FOH=136000/170*70=40800 280000 320000

224000 824000 224000/320000 0.7 or 70% 176000 40000 136000 95200 40800

3. Manufacturing Costs Televane Company Cost of goods Manufactured and Sold Statement For the Period ended on 31st, December 19b Description Amount $ $ Direct Material Opening Inventory of Raw Material 75 1 Add Purchases 336 Cost of Material Available for use 411 Less: Closing Inventory of Raw Material 85 Direct Material Used 326

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Direct Labour Cost Factory over head Cost Total Manufacturing Cost Add Opening Work in Process Inventory Cost of goods to be manufactured Less: Closing Work in process Inventory Cost of Goods 2 manufactured Add Opening Finished Goods Inventory Cost of goods available for sale Less: Closing Finished Goods Inventory Cost of Goods 3 Sold 225 135 686 80 766 30 736 90 826 110 716

4. Manufacturing Costs Krieger Company

1 2 3 4

Material Cost= Direct Labour Cost= Factor Over Head = Molding Department=2.7* 1000= Decorating Department= Estimated Cost to Produce= Mark Up= Bid Price= Estimate Prime Cost= Estimate Coversion Cost=

13000 15000 2700 2100

4800 32800 14760 18040 28000 19800

5. Income Statement Hansford Inc. Income Statement For the Period ended on 30th, September Description Amount $ Sales Direct Material Opening Inventory of Raw Material Add Purchases Cost of Material Available for use Less: Closing Inventory of Raw Material Direct Material Used Direct Labour Cost Factory over head Cost Total Manufacturing Cost Add Opening Work in Process Inventory Cost of goods to be manufactured Less: Closing Work in process Inventory 1 Cost of Goods manufactured Add Opening Finished Goods Inventory Cost of goods available for sale

$ 182000

7000 42300 49300 7400 41900 30000 45000 116900 9600 126500 13000 113500 15000 128500

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Less: Closing Finished Goods Inventory Cost of Goods Sold at Normal FOH Variance Add/Less Cost of Goods Sold at actual Gross Profit Less Operating Expenses Marketing Expenses Admn Expenses Total Expenses Net Profit 17500 111000 3200 114200 67800 14100 22900 37000 30800

6. Job Order cost Sheet. Wadsworth Machine Works Job Order Cost Sheet Direct Material Cost 9/14 Issued 9/20 Issued 9/22 Issued Total Direct Labour Cost week of Sept 20 week of Sept 26 Total Factory Overhead week of Sept 20 week of Sept 26 Total 90 Hrs 70 Hrs @$6.20 Hrs @$7.30 Hrs 558 511 1069

600 331 200 1131

90 Hrs 70 Hrs

@$5 Hrs @$5 Hrs

450 350 800 3000 1200 4200

Total Cost of Manufacturing Mark UP 40% Sale Price 7. Job Order Costing

Date a

Description Work in Process Job 36 Work in Process Job 37 Work in Process Job 38 Material Control Direct Material issued to Production

P.R
Job Cost Sheet Job Cost Sheet Job Cost Sheet

Amount Debit($) Credit($) 44000 34000 110000

32000 Store Ledger Card

Work in Process Job 36 Work in Process Job 37 Work in Process Job 38

Job Cost Sheet Job Cost Sheet Job Cost Sheet

40000 48000 42000

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Payroll Control Payroll distributed to work in process c Work in Process Job 36 Work in Process Job 37 Work in Process Job 38 FOH Applied FOH applied to Production d Finished Job 36 Finsihed Job 37 Work in Process Job 36 Work in Process Job 37 Job No 36 & 37 Completed Pay roll sheet 130000

Job Cost Sheet Job Cost Sheet Job Cost Sheet

24000 28800 25200 78000

FOH analysis

Job Cost Sheet Job Cost Sheet

144000 128800
Job Cost Sheet Job Cost Sheet

144000 128800

8. Job Order Costing. Date Description Work in Process Job 97 Work in Process Job 98 Work in Process Job 99 Material Control Direct Material issued to Production Work in Process Job 97 Work in Process Job 98 Work in Process Job 99 Payroll Control Payroll distributed to work in process Work in Process Job 97 Work in Process Job 98 Work in Process Job 99 FOH Applied FOH applied to Production Finished Job 97 Finsihed Job 98 Work in Process Job 97 Work in Process Job 98 Job No. 36 & 37 Completed Cost of Sales Job No. 97 Finished Job 97 Cost of Sale of Job No 97 recorded Accounts Receivables P.R Debit($) Credit($)

36000 30000 40000 106000

72000 70000 80000 222000

36000 35000 40000 111000 240000 135000 240000 135000

240000 240000 300000

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Sales Job No. 97 Sold on account 300000

9. Journal entries for the Cost Accounting cycle: Predetermied Overhead rate Ledger Accounts 1 Opening WIP Finished Goods 40000 CGS 390000 Closing 430000 3 O/B Purchases Material 5000 WIP 95000 Closing 100000 5 Applied FOH Opening WIP Closing 520000 520000 520000 Closing 975000 6 O/B F.Goods Closing 975000 Cost of Goods Sold at actual 600000 foh 375000 Closing Closing 975000 975000 400000 120000 O/B F.Goods 10000 100000 6 Cost of Goods Sold at Normal 600000 375000 FOH 90000 Sundry CGS 55000 430000 375000 2 O/b Material Labour FOH Work in Process 35000 90000 F.Goods 160000 120000 Closing 405000

390000 15000 405000

Factor Over Head Control Applied 120000 117000 3000 CGS Closing 0 120000 120000

3000

972000 975000 Amount Debit($) Credit($) 370000 90000 160000 120000 390000 390000

Date a

Description

P.R

Work in Process Control Material Contorl Payroll Control FOH Applied Material Labour & FOH Charged to Production Finished Goods Work in Process Control Work in Process Completed and transferred to Finished goods Cost of Goods Sold Finished Goods Cost of Goods Sold Recorded FOH Applied Cost of Goods Sold Under applied FOH Recorded Material Control

375000 375000 3000 3000 95000

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Voucher Payable 95000

Problems Chapter 3

3.1 Manufacturing Costs Hulse Company Cost of Goods Sold Statement For the Period ended on 31st, December Description $ Direct Material Opening Inventory of Raw Material Add Purchases Cost of Material Available for use Less: Closing Inventory of Raw Material Direct Material Used Direct Labour Cost Grinding Department 8000*5.6 Machining Department 4600*6 Factory over head Cost Grinding Department 8000*6 Machining Department 4600*8 1 Total Manufacturing Cost Add Opening Work in Process Inventory Cost of goods to be manufactured Less: Closing Work in process Inventory 2 Cost of Goods manufactured Add Opening Finished Goods Inventory Cost of goods available for sale Less: Closing Finished Goods Inventory 3 Cost of Goods Sold Amount $ 20000 58000 78000 18000 60000

44800 27600 72400

48000 36800 84800 217200 15000 232200 17600 214600 22000 236600 17000 219600

4 5

Coversion Cost Cost of Material Purchased

157200 58000

3.2 Manufacturing Costs

Ledger Accounts 1 Opening Finished Goods 70000 CGS (5) 2 O/b 230000 2 FOH app Work in process 50000 75000 F Goods 220000 (4)

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WIP 220000 Closing 290000 60000 290000 1 Payroll material 100000 35000 260000 Closing WIP= 5000+15000+20000 4 F.Goods FOH Cont Closing* 40000 260000 (3)

3 O/B a

Material Control 10000 WIP 50000 Closing 60000

35000

Cost of Goods Sold 230000 5000 C/B 235000 235000 235000

25000 60000 6 Acc Dep Payroll Sundry acc

5 Payed

Accrued Payroll 140000 Opening Direct Lab 20000 160000 Ind Lab

10000 100000 50000 150000

FOH Controal 10000 FOH App 50000 20000 80000 CGS

75000

Closing

5000 80000

7 FOH Cont

FOH Applied

Accounts Payables O/B 55000 15000 70000 Purchases

20000 50000

75000

WIP

75000

Cash Closing

75000

75000

70000

Problem 3-3 1) Cost of goods sold section

Columbus Company Cost of Goods Sold Statement For the Period ended on 31st October Description Direct Material Opening Inventory of Raw Material Add Purchases Cost of Material Available for use Less: Closing Inventory of Raw Material Direct Material Used Direct Labour Cost Factory over head Cost Total Manufacturing Cost Add Opening Work in Process Inventory Cost of goods to be manufactured Less: Closing Work in process Inventory 1 Cost of Goods manufactured Add Opening Finished Goods Inventory

Amount $

$ 40700 24800 65500 35700 29800 18600 27450 75850 4070 79920 4440 75480 9800

75180/20400

3.7

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Cost of goods available for sale Less: Closing Finished Goods Inventory Cost of Goods Sold at Normal 85280 9250 76030 (2800+2040020700) 2500

2. Income Statement for October Columbus Income Statement For the Period ended on 31st October Description Sales Less returns Net Sales Cost of Goods Sold at Normal Gross Profit Less Operating Expenses Marketing Expenses Paid Dep Building Dep Equipment Admn Expenses Paid Dep Building Dep Equipment Total Expenses Net Profit

Amount $

$ 144900 1300

143600 76030 67570

25050 360 192 19700 240 288

25602

20228 45830 21740

Over /Under Applied FOH FOH Control Account V/P Material Control Dep on Building Dep on M & Equip Indirect Laobur 20100 3950 1800 9600 4400 39850 FOH Applied 27450

CGS

12400

39850

Problem 3-4

Description Sales

Morrisville Canning Income Statement For the Period ended on 31st, December 19 A Amount $

$ 60000

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Direct Material Opening Inventory of Raw Material Add Purchases Cost of Material Available for use Less: Closing Inventory of Raw Material Direct Material Used Direct Labour Cost Factory over head Cost Total Manufacturing Cost Add Opening Work in Process Inventory Cost of goods to be manufactured Less: Closing Work in process Inventory 1 Cost of Goods manufactured Add Opening Finished Goods Inventory Cost of goods available for sale Less: Closing Finished Goods Inventory Cost of Goods Sold at Normal FOH Variance Add/Less Cost of Goods Sold at actual Gross Profit Less Operating Expenses Marketing Expenses Admn Expenses Total Expenses Net Profit Cash Account O/B Sales 5000 60000 Material Labour FOH (9000+2000-3000) Admn Exp Marketing Exp C/B 65000 15000 9000 8000 6000 8000 19000 46000 4000 15000 19000 2000 17000 9000 9000 35000 2000 37000 1000 36000 6000 42000 4000 38000 2000 40000 20000

6000 9000 15000 5000

Assets Cash Accounts Receivables Finished Goods Work in Process Materials Prepaid expenses Property Plant etc Less Depreciation

Morrisville Canning Company Balance Sheet As on 31st December, 19A $ Liabilities & Equities 19000 Current Liabilites 10000 Common Stock 4000 Retained Earnings 10000 1000 Profit 5000 2000 500 30000 4000 26000 62500

$ 17500 30000 15000

62500

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Chapter 3

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