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Question 2.

25
Case
I II III
$ 21,000* $ 18,000 $ 3,500
104,750 142,500 159,000*
24,500 12,000 10,500
$101,250 $148,500* $152,000

Question 2.26
1. $640
2. Dircet Labour $576; OH $64

Question 2.27
1. $746
2. OT Premium $$15
3. DL $$731; OH $15
Question 2.28
1. COGM $1,130,000
2. COGS $1,120,000
3. Net Income $416,000

Question 2.38
1. $913
2. DL $$688; MOH (IDLE TIME) $48; (OT PRMIUM) $65; (IDL) $112)
Question 2.40
Cost Item Number Product Cost or Period Cost
1. Product
2. Period*
3. Product
4. Period*
5. Product
6. Period*
7. Product
8. Product
9. Product

Question 2.46
1. Cost of ending inventory $1,040,000
2. Net Income $288,000
3. (a) No change. Direct labor is a variable cost, and the cost per unit will remain
constant.

(b) No change. Despite the decrease in the number of units produced, this is a
fixed cost, which remains the same in total.

(c) No change. Selling and administrative costs move more closely with changes
in sales than with units produced. Additionally, this is a fixed cost.

(d) Increase. The average unit cost of production will change because of the per-
unit fixed manufacturing overhead. A reduced production volume will be divided
into the fixed dollar amount, which increases the cost per unit.

Chapter 3
Question 3.24
1. $695,300
2. $982,300
3. $961,500
4. $986,000
5. Overapplied $44,500

Question 3.30
Raw-Material Inventory Work-in-Process Inventory
325,200 26,100
248,500 248,500
76,700 435,400
252,000
Wages Payable 172,000
435,400 735,500

Manufacturing Overhead Finished-Goods Inventory


252,000 42,300
172,000
Sales Revenue 193,500
267,500 20,800

Accounts Receivable Cost of Goods Sold


267,500 193,500

Question 3.31
1. $672,000
2. $450,000
3. $1,472,000
4. $1,432,000
Question 3.32
1. TMC $970,500 & COGM $964,650
2. COGS $958,350

Question 3.33
budgetedmanufacturing overhead
1. Predetermined overhead rate =
budgetedlevel of cost driver
$650,000
(a) = $32.50 per machine hour
20,000 machine hours
$650,000
(b) = $26.00 per direct-labor hour
25,000 direct - labor hours
$650,000 $2.00 per direct-labor dollar or 200%
(c) =
$325,000 * of direct-labor cost

*Budgeted direct-labor cost = 25,000 $13

2. Actual applied overapplied or


manufacturing manufacturing = underapplied
overhead overhead overhead

(a) $690,000 (22,000)($32.50) = $25,000 overapplied overhead

(b) $690,000 (26,000)($26.00) = $14,000 underapplied overhead

(c) $690,000 = $38,000 overapplied overhead


($364,000)(200%)

Question 3.35
1. PDOR = $13
2. $21,000

Question 3.42
1. budgetedmanufacturing overhead
Predetermined overheadrate =
budgeted direct - labor hours
$675,000
= = $15 per hour
(3,000) (15)

2. Journal entries:

(a) Raw-Material Inventory ............................................ 43,400


Accounts Payable ............................................. 43,400
(b) Work-in-Process Inventory ....................................... 1,050
Raw-Material Inventory .................................. 1,050

(c) Manufacturing Overhead .......................................... 168


Manufacturing-Supplies Inventory ................ 168

(d) Manufacturing Overhead .......................................... 9,000


Accumulated Depreciation: Building ............. 9,000

(e) Manufacturing Overhead .......................................... 500


Cash ................................................................... 500

(f) Work-in-Process Inventory ....................................... 36,600


Wages Payable .................................................. 36,600

To record direct-labor cost.

Work-in-Process Inventory ....................................... 22,950


Manufacturing Overhead ................................ 22,950

To apply manufacturing overhead to work in process ($22,950 = 1,530 x $15 per hour).

(g) Manufacturing Overhead .......................................... 1,050


Property Taxes Payable ................................... 1,050

(h) Manufacturing Overhead .......................................... 4,200


Wages Payable .................................................. 4,200

PROBLEM 3-42 (CONTINUED)

(i) Finished-Goods Inventory ......................................... 17,500


Work-in-Process Inventory ............................. 17,500

(j) Accounts Receivable ................................................... 26,400


Sales Revenue ................................................... 26,400

Cost of Goods Sold ..................................................... 14,000*


Finished-Goods Inventory ............................... 14,000

*$14,000 = (12/15)($17,500)

Question 3.49
1. COGM $1,329,375
2. COGS $1,327,500
3. $30,750
Question 3.54

budgetedmanufacturing overhead
1. Predetermined overheadrate
budgetedmachine hours
$306,000
$6 per machine hour
51,000
2. Calculation of applied manufacturing overhead:

Applied manufacturing overhead = machine hrs. used x predetermined overhead rate


$36,000 = 6,000 hrs. x $6 per hr.

3. Underapplied overhead = actual overhead applied overhead


$2,000 = $38,000 $36,000

4. Cost of Goods Sold........................................................... 2,000


Manufacturing Overhead ..................................... 2,000

PROBLEM 3-54 (CONTINUED)

5. (a) Calculation of proration amounts:

Calculation
Account Explanation Amount* Percentage of Percentage
Work in Process Job B19 only $10,800 30% 10,800 36,000
Finished Goods Job T28 only 18,000 50% 18,000 36,000
Cost of Goods
Sold Job M07 only 7,200 20% 7,200 36,000
Total $36,000 100%

*Machine hours used on job predetermined overhead rate.

Underapplied Amount Added


Account Overhead Percentage to Account
Work in Process $2,000 30% $ 600
Finished Goods 2,000 50% 1,000
Cost of Goods Sold 2,000 20% 400
Total $2,000

(b) Journal entry:


Work-in-Process Inventory ............................................... 600
Finished-Goods Inventory ................................................. 1,000
Cost of Goods Sold.............................................................. 400
Manufacturing Overhead ........................................ 2,000