32 Part O n e Job Order Cost Accounting

Analyze work in process. (Obj. 6). Work in Process for the Dallas Manufacturing
Company is recorded on the T-account below.
a. What are the manufacturing costs for the month?
b. What is the cost of goods manufactured during the month?
c. What is the ending inventory balance?

W ork in Process
Jan. 1 Balance 84,390 Jan. 31 Transferred to
31 Materials 258,714 Finished Goods 705,226
31 Labor 309,167
Jan. 31 Mfg. Overhead 140,281

(1.2) Identify work flow procedures. (Obj. 5). For each procedure identify the steps in the
manufacturing cycle in which it occurs: procurement, production, warehousing, or selling.
a. Materials are requisitioned and transferred to the factory.
b. An order is sent to a supplier to obtain more raw materials.
c. A customers order is received and filled.
d. The weekly payroll is recorded.
e. Finished goods are placed in the appropriate storage areas.
f. New employees are interviewed and hired by the personnel department.
g. Finished goods are shipped to the customer.
h. Manufacturing overhead costs are estimated and charged to the product.
i. A shipment of raw materials arrives and is unpacked.
(t.3) Calculate manufacturing costs and cost of goods manufactured. (Obj. 1). The costs
i/ for Simpson, Inc. for the year ended December 31, 2006, are given below.

Direct Materials 70,420

Direct Labor 87,953
Manufacturing Overhead 42,230
Work in Process Inventory, January 1, 2006 39,490
Work in Process Inventory, December 31, 2006 35,620

a. What are the manufacturing costs for the year?

b. What is the cost of goods manufactured for the year?
1.4) Calculate costs of goods sold and gross profit. (Obj. 11). The following amounts relate
to the Micro-Disk Corporation:

Finished Goods Inventory, April 1, 2006 $ 98,480

Finished Goods Inventory, April 30, 2006 94,290
Cost of Goods Manufactured 135,705
Net Sales 170,920

a. Calculate the cost of goods sold.

b. Calculate the gross profit on sales.
 C h a p te r 1 Introduction to Cost Accounting and the Job Order Cost Cycle 33

{AJS) Calculate cost of goods manufactured, cost of goods sold, and gross profit. (Objs. 10,
11). The New England Plumbing Company manufactures water pumps and filters and
uses a job cost order accounting system. Cost data for 2006 are given below.

Raw Materials, January 1, 2006 $ 448,543

Raw Materials, December 31, 2006 461,417
Work in Process, January 1, 2006 383,463
Work in Process, December 31, 2006 498,182
Finished Goods, January 1, 2006 321,932
Finished Goods, December 31, 2006 301,647
Raw Materials Purchases 731,917
Direct Labor 1,182,680
Manufacturing Overhead 814,530
Net Sales 4,708,917

a. Calculate cost of goods manufactured.

b. Calculate cost of goods sold.
c. Calculate gross profit on sales.
Analyze manufacturing transactions. (Obj. 6). Eight transactions in the manufactur
ing process are recorded in the T accounts below. Each transaction is coded by a letter and
may be spread over several accounts. Describe what happened in each transaction.

Factory Payroll
Raw Materials W ork in Process Clearing
(A) 35,000 (B) 2 8 ,0 0 0 ^ fi) 26,000 (G) 58,500 (A) 35,000 (C) 33,000 (D) 33,',000
^D) 25,000 ------- (E) 3,300
(F) 14,200
**

Finished I Salaries and W ages 1 M anufacturing Cost of Goods

Goods Payable Overhead Control Sold
(G) 58,500 (H) 49,700 (C) 33^000 -^B) 2,000 (F) 14,200 (H) 49,700
w k 8,000
3,300

(1.7) Calculate prime costs and conversion costs. (Obj. 1). The following costs were in
curred by Prime Radio Manufacturers:

Direct Materials $250,280

Direct Labor 391,320
Manufacturing Overhead 222,492

a. What were the prime costs for the company?

b. What were the conversion costs?
1.8) Calculate direct materials cost. (Obj. 1). The Auto Products Company maintains a raw
materials inventory account for all materials used in its factory operations. Purchases of both
direct and indirect materials are debited to this account. The balance on January 1,2006, for the
raw materials account was $450,933. Purchases of raw materials for the year were $962,091.
The ending inventory on December 31, 2006, was $438,946. Calculate the following:
a. What was the total of the raw materials available for use?
b. What was the cost of raw materials used in factory operations?
34 Part O ne Job Order Cost Accounting

c. Materials requisitions show that of the total raw materials used during the year, indirect
terials amounted to $73,170. What was the amount of direct materials used during the ye
Analyze manufacturing overhead. (Obj. 9). During May the Manufacturing Overh
Control account for Gray Manufacturers had various debit postings that totaled $66.4
and a credit posting for $69,736. Was the manufacturing overhead for the month over
plied or underapplied? Bywhat amount?
( 1. 10) Calculate the missing amounts in the following three independent situation
(Obj. 10)

(A) (B) (C)

Direct Materials 50,526 $32,918
Direct Labor 30,816 40,223 \ 64,2
Manufacturing Overhead 36,792 46,2
Total Manufacturing Costs 100,100 192,1
Beginning Work in Process 10,419 6,812
Ending Work in Process 7,262 20,41
Cost of Goods Manufactured 100,697 189,77

Problems (1.1 A) Record manufacturing costs. (Obj. 8). Miller Corporation manufactures industri
springs and coils that are sold to other companies for assembling into machinery. The fr
lowing costs were incurred during the month of August 2006.
Raw materials purchased: $182,640
Raw materials used: direct materials, $120,290; indirect materials, $24,630
Factory wages earned: $92,740
Factory wages allocated: direct labor, $77,820; indirect labor, $14,920
Voucher recorded for manufacturing overhead costs incurred: $22,800
Depreciation on factory building: $30,490
Depreciation on factory equipment: $7,480
Manufacturing overhead costs applied to jobs worked on: $79,423
Finished goods transferred to warehouse: $281,460
Finished goods sold and shipped to customers: $198,150 (cost)
Finished goods sold and billed to customers: $297,225 (selling price)

Instructions
Prepare the general journal entries dated August 31, 2006.
(1.2A) Prepare a statement of cost of goods manufactured. (Obj. 10). The data for the ye
' ended June 30, 2007, that follow relate to the Gardner Manufacturing Corporation.

^ Raw Materials, July 1, 2006 $ 60,000

/ Raw Materials, June 30, 2007 52,000
'W ork in Process Inventory, July 1, 2006 24,600
'Work in Process Inventory, June 30, 2007 26,000
Materials Purchases 203,600
Direct Labor 118,200
Indirect Labor 11,080
Payroll Taxes Expense Factory 9,800
Utilities 16,400
Repairs and Maintenance 4,200
 Cha pter 1 Introduction to Cost Accounting and the Job Order Cost Cycle 35

Indirect Materials and Supplies 15,480

DepreciationFactory Equipment 5,100
Insurance 2,460
Rent Factory Building 57,000

Instructions
Prepare the statement of cost of goods manufactured for the year ended June 30, 2007.
^ { f . 3 A) Prepare a statement of cost of goods manufactured and an income statement. (Objs.
10,11). The following data pertain to the operations of the Clayton Company, a manu
facturer of porch furniture:

Oct. 1, 2006 Sept. 30, 2007

Inventories:
Finished Goods $ 20,000 $ 25,000
Raw Materials 147,000 136,000
Work in Process 118,000 122,000
Raw Material Purchases 284,000
Direct Labor 236,000
Indirect Materials and Supplies 47,000
Indirect Labor 84,000
Other Manufacturing Overhead 157,000
Sales 1,246,000
Selling Expenses 265,000
Administrative Expenses 87,000

Instructions
1. Prepare a statement of cost of goods manufactured for the year ended September 30,2007.
2. Prepare an income statement.
(1.4A) Prepare a statement of cost of goods manufactured and an income statement. (Objs.
10,11). The following data pertain to Gomez Candy Company:

Jan. 1, 2006 Dec. 31, 2006

Inventories:
Finished Goods $38,400 $ 43,900
Raw Materials 23,825 24,100
Work in Process 16,460 18,280
Direct Labor 73,240
Freight In 14,800
Administrative Expenses 56,890
Indirect Materials and Supplies 14,640
Insurance Expense Factory 12,760
Depreciation Plant and Equipment 19,500
Raw Material Purchases 171,820
Payroll Taxes Expense Factory 18,700
Utilities Factory 21,600
Property Taxes Factory 22,080
Repairs and Maintenance Factory 14,720
Patent Amortization 14,000
Sales 683,450
Selling Expenses 89,340
Waste Removal 5,800
Part O ne Job Order Cost Accounting

Instructions
1. Prepare a statement of cost of goods manufactured for the year ended December 31,
2007. NOTE: Freight In should be added to Raw Materials Purchases to determine the
Delivered Cost of Raw Materials Purchases.
2. Prepare an income statement.

(1.5A) Record and post manufacturing costs and prepare financial statements. (Obj. 8).
Consolidated Lamp Company manufactures desk lamps. The total manufacturing costs for
July 2006 are as follows:
Raw materials purchased: $102,340
Raw materials used: direct materials, $83,005; indirect materials, $26,715
Factory wages earned: $138,240
Factory wages allocated: direct labor, $104,620; indirect labor, $33,620
Other overhead costs incurred: $29,568 (credit the total to Vouchers Payable 201)
Estimated manufacturing overhead costs applied to jobs worked on: $87,829
Finished goods transferred to warehouse: $271,783
Finished goods sold and shipped to customers: $275,333
Finished goods sold and billed to customers: $382,257 (selling price)
Instructions
1. Prepare the general journal entries to record each of the costs. Date the entries July 31,2006.
2. Post the general journal entries to the general ledger accounts. The general ledger ac
counts 121, 122, and 126 have the following opening balances at July 1, 2006. Raw
Materials 121, $86,280 Dr.; Work in Process 122, $68,837 Dr.; Finished Goods 126,
$42,090 Dr.
3. Prepare the statement of cost of goods manufactured.
4. Prepare the income statement. Assume selling expenses of $49,741; administrative ex
penses of $21,800; and estimated federal income taxes of $14,153.
(1.6A) Analyze journal entries. (Obj. 8). Florida Bicycle Company, which uses a job or
der cost accounting system, recorded the following journal entries during March 2006:

2006
. 31 Raw Materials 830,710.00
Vouchers Payable 830,710.00
31 Work in Process 682,340.00
Manufacturing Overhead Control 64,950.00
Raw Materials 747,290.00
31 Factory Payroll Clearing 764,240.00
Salaries and Wages Payable 764,240.00
31 Work in Process 691,570.00
Manufacturing Overhead Control 72,670.00
Factory Payroll Clearing 764,240.00
31 Manufacturing Overhead Control 407,060.00
Vouchers Payable 407,060.00
31 Work in Process 558,120.00
Manufacturing Overhead
Control 558,120.00
 C h a p te r 1 Introduction to Cost Accounting and the Job Order Cost Cycle 37

31 Finished Goods 1,735,290.00

Work in Process 1,735,290.00
31 Cost of Goods Sold 1,529,640.00
Finished Goods 1,529,640.00
31 Accounts Receivable 2,247,424.00
Sales 2,247,424.00

Instructions
Describe each transaction that took place.
(1.1B) Record manufacturing costs. (Obj. 8). The Longhorn Manufacturing Corporation
uses the job order cost system in the manufacturing of its finished product. The costs for
the month of April 2006 follow:
Raw materials purchased: $87,920
Raw materials used: direct materials, $67,230; indirect materials, $81,900
Factory wages earned: $97,780
Factory wages allocated: direct labor, $82,160; indirect labor, $15,620
Voucher recorded for manufacturing overhead costs incurred: $32,660
Depreciation on factory building: $15,800
Depfeciation on factory equipment: $13,000
Manufacturing overhead costs applied to jobs worked on: $84,560
Finished goods transferred to warehouse: $221,500
Finished goods sold and shipped to customers: $192,840
Finished goods sold and billed to customers: $268,200 (selling price)
Instructions
Prepare the general journal entries dated April 30, 2006.
(1.2B) Prepare a statement of cost of goods manufactured. (Obj. 10). The data for the year
ended July 31, 2007, that follow relate to the Bonner Phone Corporation.

Raw Materials, August 1, 2006 $ 48,700

Raw Materials, July 31, 2007 46,200
Work in Process Inventory, August 1, 2006 30,900
Work in Process Inventory, July 31, 2007 33,650
Materials Purchases 180,450
Direct Labor 577,600
Indirect Labor 27,200
Payroll Taxes Expense Factory 19,930
Utilities 18,060
Repairs and Maintenance 13,800
Indirect Materials and Supplies 26,450
Depreciation Factory Equipment 9,200
Insurance 6,430
Rent Factory Building 15,500

Instructions
Prepare the statement of cost of goods manufactured for the year ended July 31, 2007.

m
38 Part O ne Job Order C ost Accounting

(1.3B) Prepare a statement of cost of goods manufactured and an income statement. (Obj s.
/
1 10,11). The following data pertain to the operations of the Kissel Company, a manufac
turer of skateboards:

July 1, 2006 June 30, 2007

Inventories:
Finished Goods $210,000 $ 290,000
Raw Materials 345,000 358,000
Work in Process 327,000 318,000
Raw Material Purchases 778,000
Direct Labor 512,000
Indirect Materials and Supplies 88,000
Indirect Labor 144,000
Other Manufacturing Overhead 549,000
Sales 2,500,000
Selling Expenses 350,000
Administrative Expenses 90,000

Instructions
1. Prepare a statement of cost of goods manufactured for the year ended June 30, 2007.
2. Prepare an income statement.
^ / ( 1-4B) Prepare a statement of cost of goods manufactured and an income statement. (Obj s.
10,11). The following data pertain to Levine Manufacturing Company:

April 1, 2006 March 31, 2007

Inventories:
Finished Goods $38,400 $ 63,900
Raw Materials 23,825 45,100
Work in Process 16,460 27,280
Direct Labor 182,240
Freight In 34,800
Administrative Expenses 54,890
Indirect Materials and Supplies 34,640
Insurance Expense Factory 32,760
Depreciation Plant and Equipment 39,500
/R aw Materials Purchases 191,820
^.Payroll Taxes Expense Factory 38,700
JUtilities Factory 41,600
Property Taxes Factory 42,080
Repairs and Maintenance Factory 24,720
yPatent Amortization 34,000
Sales 803,450
Selling Expenses 89,340
Waste Removal 9,800

Instructions
1. Prepare a statement of cost of goods manufactured for the year ended March 31, 2007.
NOTE: Freight In should be added to Raw Materials Purchases to determine the Deliv
ered Cost of Raw Materials Purchases.
2. Prepare an income statement.
 C h ap te r 1 Introduction to C ost Accounting and the Job Order Cost Cycle 3i

(1.5B) Record and post manufacturing costs and prepare financial statements. (Obj. 8).
The Best Paint Company manufactures paints for industrial use. The total manufacturing
costs for the month of January 2006 follow:
Raw materials purchased: $202,750
Raw materials used: direct materials, $188,240; indirect materials, $22,650
Factory wages earned: $306,800
Factory wages allocated: direct labor, $241*590; indirect labor, $65,210
Other overhead costs incurred: $88,720 (credit the total to Vouchers Payable 201)
Estimated manufacturing overhead costs applied to jobs worked on: $174,340
Finished goods transferred to warehouse: $581,350
Finished goods sold and shipped to customers: $572,510
Finished goods sold and billed to customers: $908,776 (selling price)
Instructions
1. Prepare the general journal entries to record each of the costs. Date the entries January
31,2006.
2. Post the general journal entries to the general ledger accounts. The general ledger accounts
121, 122, and 126 have the following opening balances at January 1, 2006; RawJVlaterials
121, $64,820 Dr.; Work in Process 122, j .83,920 Dr.; Finished Goods 126, $66*200 Dr.
3. Prepare the statement of cost of goods manufactured.
4. Prepare the income statement. Assume selling expenses of $184,922, administrative ex
penses of $85,200, and estimated federal income taxes of $22,430.
(1.6B) Analyze journal entries. (Obj. 8). The Mining Equipment Company, which uses a job
order cost system, recorded the following journal entries during June 2006.

June 30 Raw Materials 590,360.00

Vouchers Payable 590,360.00
30 Work in Process 475,820.00
Manufacturing Overhead Control 58,040.00
Raw Materials 533,860.00
30 Factory Payroll Clearing 688,713.00
Salaries and Wages Payable 688,713.00
30 Work in Process 583.980.00
Manufacturing Overhead Control 104.733.00
Factory Payroll Clearing 688,713.00
30 Manufacturing Overhead Control 86,190.00
Vouchers Payable 86,190.00
30 Work in Process 257,310.00
Manufacturing Overhead Control 257,310.00
30 Finished Goods 1,185,200.00
Work in Process 1,185,200.00
30 Cost of Goods Sold 1,037,540.00
Finished Goods 1,037,540.00
30 Accounts Receivable 1,944,680.00
Sales 1,944,680.00

Instructions
Describe each transaction that took place.