Ex.

187
a.
Cost of goods sold:
Sales.....................................................................................
Less gross profit.................................................................
Cost of goods sold..............................................................
b.
Direct materials cost:
Materials purchased............................................................
305,000
Less: Indirect materials......................................................
Materials inventory...................................................
Direct materials cost...........................................................
258,000
c.
Direct labor cost:
Total manufacturing costs for the period.........................
640,000
Less: Direct materials cost................................................
Factory overhead......................................................
Direct labor cost..................................................................
276,500

$ 850,000
235,000
$ 615,000

$
$ 27,000
20,000

47,000
$

$
$ 258,000
105,500*

363,500
$

*$65,000 + $27,000 + $13,500

Ex. 1813
a.

Work in Process..............................................................
Factory Overhead............................................................
Wages Payable...........................................................

3,836
845

b. Work in Process..............................................................
Factory Overhead......................................................

4,932

$3,836 $14 per hour = 274 hours

274 hours $18 per hour = $4,932

4,681
4,932

Ex. 1814
a. Factory 1: $19.00 per machine hour ($237,500 12,500 machine hours)
b. Factory 2: $12.50 per direct labor hour ($112,500 9,000 direct labor hours)
c.

Factory 1:
Work in Process.........................................................
Factory Overhead.................................................
($19.00 1,035)
Factory 2:
Work in Process.........................................................
Factory Overhead.................................................
($12.50 770)

d. Factory 1$435 debit (underapplied) ($20,100 $19,665)

Factory 2$175 credit (overapplied) ($9,450 $9,625)

19,665
19,665

9,625
9,625

Ex. 1822
a.
Mar.

7
11
22
25
30
31
31
31
31
31

Work in Process (420 hrs. $150)...............

Salaries Payable.......................................

63,000

Work in Process.............................................
Cash...........................................................

24,000

Work in Process (250 hrs. $200)...............

Salaries Payable.......................................

50,000

Work in Process.............................................
Consultant Fees Payable.........................

45,000

Work in Process (670 $50).........................

Office Overhead........................................

33,500

Office Overhead.............................................
Cash...........................................................

28,000

Office Overhead.............................................
Supplies.....................................................

4,000

Salaries Payable............................................
Cash...........................................................

63,000

Accounts Receivable.....................................
Fees Earned..............................................

250,000

Cost of Services.............................................
Work in Process.......................................

215,500

63,000
24,000
50,000
45,000
33,500
28,000
4,000
63,000
250,000
215,500*

*$63,000 + $24,000 + $50,000 + $45,000 + $33,500

b.

Office overhead incurred ($28,000 + $4,000).............

Office overhead applied...............................................
Overapplied overhead..................................................

$ 32,000
33,500
$ (1,500)

c.

Fees earned...................................................................
Cost of services............................................................
Gross profit...................................................................

$250,000
214,000*
$ 36,000

*$215,500 $1,500. Assumes the over- or underapplied office overhead is

closed to cost of services annually.

Ex. 1819
a.

MERCURY SHOE COMPANY

Income Statement
For the Month Ended May 31, 2006

Revenues..............................................................................
510,000
Cost of goods sold..............................................................
Gross profit..........................................................................
209,900
Selling expenses.................................................................
Administrative expenses....................................................
Income from operations......................................................
b.

$
300,100
$
$116,000
48,400

164,400
$ 45,500

Materials inventory:
Purchased materials................................................
155,300
Less: Materials used in production........................
Materials inventory, May 31.....................................

$
145,800
$ 9,500

Work in process inventory:

Materials used in production...................................
145,800
Direct labor................................................................
Factory overhead (75% $94,500)..........................
Additions to work in process..................................
311,175
Less: Transferred to finished goods......................
Work in process inventory, May 31........................

$
94,500
70,875
$
304,300
$ 6,875

Finished goods inventory:

Transferred to finished goods..............................................
304,300
Less: Cost of goods sold......................................................
Finished goods inventory, May 31.......................................

$
300,100
$ 4,200

Prob. 184A
1. and 2.

JOB ORDER COST SHEET

Customer
Address
Item

Danzel Bishop
1900 Peachtree
Atlanta
Reupholster couch and chair

Date June 10, 2006

Date wanted July 16, 2006
Date completed July 11, 2006
Job. No. 00838

ESTIMATE
Direct Materials

Direct Labor

Amount
9

meters at $18

Total

Summary

Amount

Amount

162.00

14 hours at $10

140.00

Direct materials
Direct labor
Factory overhead

162.00
140.00
49.00

162.00

Total

140.00

Total cost

351.00

ACTUAL
Direct Materials
Mat.
Req.
No.
U642
U651
Total

Description
4 meters
at $18
8 meters
at $18

Amount

Direct Labor
Time
Ticket
No.

72.00

1519

144.00

1520

216.00

Total

Description
8 hours
at $10
7 hours
at $10

Summary

Amount
80.00
70.00
150.00

Item
Direct materials
Direct labor
Factory overhead
Total cost

Amount
216.00
150.00
52.50
418.50

Comments:
The direct materials cost exceeded the estimate by $54 because three meters of
materials were spoiled. The direct labor cost exceeded the estimate by $10
because an additional one hour of labor was used by an inexperienced employee.

Prob. 185A
1. Supporting calculations:

Job No.

Quantity

No. 51 V-100

150

No. 52 V-200

400

No. 53 V-500

Jan. 1
Work in
Process

Direct
Materials

$ 4,000 $ 16,500

$ 12,500

Factory
Overhead

Total
Cost

Unit
Cost

$ 15,000 $ 48,000 $320.00

78,260 $195.65

Units
Sold

Cost of
Goods
Sold

140

$ 44,800

260

50,869

32,400

16,300

19,560

150

8,000

5,100

6,120

No. 54 A-200

200

24,600

12,500

15,000

52,100 $260.50

192

50,016

No. 55 V-400

160

18,800

10,600

12,720

42,120 $263.25

148

38,961

No. 56 A-100

90

6,500

3,400

4,080

1,040

$ 14,000 $ 106,800

$ 60,400

Total

10,000

Direct
Labor

19,220

13,980

$ 72,480 $ 253,680

$ 184,646

A. $109,800. Materials applied to production in January + indirect

materials.
($106,800 + $3,000)
B. $14,000. From table above and problem.
C. $106,800. From table above.
D. $60,400. From table above.
E. $72,480. $60,400 1.2 and from table above.
F. $220,480. ($48,000 + $78,260 + $52,100 + $42,120)
G. $184,646. From table above.
H. $13,800. Wages incurred less direct labor applied to production in
January.
($74,200 $60,400)
2. January 31 balances:
Materials
Work in Process
56)
Finished Goods
Factory Overhead
$3,000

$13,200
$33,200*

($10,000 + $110,000 $106,800)

($19,220 + $13,980, Job 53 and Job

$35,834**
$3,320 Dr.

($220,480 $184,646)
underapplied ($4,000 + $13,800 +

+ $55,000 $72,480)
* or ($14,000 + $106,800 + $60,400 + $72,480 $220,480)
**
Units in
Job No.
Inventory
Cost
Job 51
Job 52
Job 54
Job 55
Total

10
140
8
12

$ 3,200
27,391
2,084
3,159
$ 35,834

Ex. 1911
a.
Units in process at beginning of period.......................................
Units placed in production during period.....................................
Less units finished during period.................................................
(54,500)
Units in process at end of period..................................................

2,500
56,000
4,000

b.
Whole Units
Inventory in process, beginning
(60% completed)............................
Started and completed.......................
Transferred to finished goods...........
Inventory in process, ending.............
Total units............................................

2,500
52,000*
54,500
4,000
58,500

Equivalent Units
Direct Materials Conversion
0
52,000
52,000
4,000
56,000

1,500
52,000
53,500
1,000
54,500

*54,500 2,500
c.
Costs
Direct Materials
Conversion
Total costs for period in
Assembly Department....................................
**
Total equivalent units
(from above)....................................................
Cost per equivalent unit........................................
**$75,210 + $112,815
d.

$275,600 [($1.85 + $3.45) 52,000 units]

$103,600

$188,025

56,000
$
1.85

54,500
$
3.45

Appendix Ex. 1925

a. and b.
Whole Units
Units to be accounted for:
Beginning work in process..............
Units started during the period........
Total..........................................................

8,000
67,400
75,400

Units to be assigned costs:

Transferred to finished goods.........
Inventory in process, ending...........
Total units................................................

70,000
5,400
75,400

Equivalent Units
of Production

70,000
1,080*
71,080

*5,400 0.20
c.

Cost per equivalent unit

Cost per equivalent unit =

Total production costs

Total equivalent units
$277,212
= $3.90
71,080 units

d. Cost of units transferred to Finished Goods: $273,000 (70,000 units

$3.90)
e.

Cost of units in ending Work in Process: $4,212 (5,400 units 0.20 $3.90)

PROBLEMS
Prob. 191A
1.

a. Materials......................................................................
Accounts Payable.................................................

286,020

b. Work in ProcessMaking Department....................

Work in ProcessPacking Department..................
Factory OverheadMaking Department.................
Factory OverheadPacking Department................
Materials................................................................

202,320
66,060
5,760
2,646

c. Work in ProcessMaking Department....................

Work in ProcessPacking Department..................
Factory OverheadMaking Department.................
Factory OverheadPacking Department................
Wages Payable.....................................................

122,220
76,860
25,740
42,660

d. Factory OverheadMaking Department.................

Factory OverheadPacking Department................
Accumulated Depreciation..................................

22,500
16,920

e. Factory OverheadMaking Department.................

Factory OverheadPacking Department................
Prepaid Insurance................................................

4,680
1,800

f. Work in ProcessMaking Department....................

Work in ProcessPacking Department..................
Factory OverheadMaking Department............
Factory OverheadPacking Department..........

57,600
64,800

g. Work in ProcessPacking Department..................

Work in ProcessMaking Department..............

378,846

h. Finished Goods..........................................................
Work in ProcessPacking Department.............

584,460

i. Cost of Goods Sold...................................................

Finished Goods....................................................

594,900

286,020

276,786

267,480

39,420

6,480

57,600
64,800
378,846
584,460
594,900