1 2

3 4 5 6 7 8 9 10 11 12 13 14 15

C OH control used to record "expenses" in a factory A the allocated was under by $28,000 allocated $606,000 under by 28,000 actually used $634,000 A WIP contains actual prime costs + allocated overhead D fixed cost because higher denominator -- variable cost per unit never changes C the $140,000 ($14 * 10,000 units) not divided over 20,000 units A the paper becomes the actual book C $420 DL to WIP -- straight time 42 hours at $10 each 10 2 hours of overtime premium at $5 per hour B that's the definition of finished goods C use the actual prime costs so only overhead is allocated A the total is given, so if one product has smaller cost, something must have higher cost B DL and DM are recorded in WIP, all other "expenses" are recorded in overhead control C product costs are recorded in COGS on the Inc. Stmt. Upon sale -- before they're on the Bal Sht as inventory B see below B see below A WIP is goods being manufactured #13 beg WIP DM used DL overhead total mfg. costs end WIP COGM beg WIP DM used DL overhead end WIP COGM as given $15 30 45 90 (20) $70 NEED $30 MORE $15 30 PLUG 30 45 120 (20) $100 #14 beg FG COGM GAS less end FG COGS as given $36,000 246,000 282,000 (34,000) $248,000

#1

a $257,000

beg FG COGM GAS end FG COGS $500,000 (270,000) $230,000

$80,000
PLUG

80,000 (67,000) $13,000 NEED $257,000 more

beg FG COGM GAS end FG COGS

$80,000 257,000 337,000 (67,000) $270,000

sales COGS GM

finished goods 80,000 270,000 257,000 67,000 beg FG $85,000 COGM 378,000 GAS 463,000 end FG (92,000) COGS b $371,000

#2

DM beg purchases DM ending DM used DL overhead current year costs beg WIP end WIP COGM

$45,000 112,000 157,000 (42,000) $115,000 119,000 150,000 384,000 12,000 (18,000) $378,000

DL $119,000 OH 150,000 conversion costs c $269,000

DM used $115,000 DL 119,000 prime costs d $234,000

sales $650,000 COGS (371,000) GM e $279,000 SINCE THIS WASN'T LABELLED AS "e" , WON'T COUNT

#3

a budgeted rate: $150,000 b $187,500 c $7.50

20,000

$7.50

per hour worked

25,000 actual hours worked

WIP 187,500 overhead allocated overhead allocated 187,500 COGS overhead control [actual]

187,500

7,500 180,000

#4

a WIP 12,000 salary expense 4,000 Sal. Pay. or cash b WIP 9,000 overhead allocated OH cont. 900 prepaid rent

d 16,000 e 9,000

FG

11,000 WIP 14,250 sales --- and--9,000 FG

11,000

AR

14,250

COGS c 900

9,000

#5 a

Standard
375/600

Deluxe
225/600

total $60,000 total $20,000 $40,000 $60,000 allocate $20,000 using setups allocate $40,000 using components Total OH allocated to each product allocate the $60,000 using hours

$37,500 Standard
22/50

$22,500 Deluxe
28/50

$8,800
8/20

$11,200
12/20

$16,000 b $24,800

$24,000 $35,200

c When Barnes used the functional system Standard had too much overhead and Deluxe had too little. By switching to ABC method the overhead will be allocated more realistically. With better product costing information Barnes will be able to make more rational pricing and other decisions.