Exercise 116, to 125 | Accounting homework help

Ex.  116

Manufacturing cost data for Dolan Company, which uses a job order cost system, are presented below:

                                                                            Case A                 Case B 

         Direct Materials Used                                       (a)                  $103,000

         Direct Labor                                              $  70,000                 140,000

         Manufacturing Overhead Applied                63,000                       (d)

         Total Manufacturing Costs                         240,000                       (e)

         Work in Process, 1/1/02                                   (b)                      45,000

         Total Cost of Work in Process                    300,000                       (f)

         Work in Process, 12/31/02                               (c)                      40,000

         Cost of Goods Manufactured                     205,000                       (g)



Indicate the missing amount for each letter. Assume that overhead is applied on the basis of direct labor cost and that the rate is the same for both cases.


Ex.  117

Gray Corporation had the following transactions during its first month of operations:

1.   Purchased raw materials on account, $85,000.

2.   Raw materials of $30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,000 was classified as indirect materials.

3.   Factory labor costs incurred were $95,000 of which $84,000 pertained to factory wages payable and $11,000 pertained to employer payroll taxes payable.

4.   Time tickets indicated that $80,000 was direct labor and $15,000 was indirect labor.

5.   Overhead costs incurred on account were $96,000.

6.   Manufacturing overhead was applied at the rate of 150% of direct labor cost.

7.   Goods costing $115,000 are still incomplete at the end of the month; the other goods were completed and transferred to finished goods.

8.   Finished goods costing $90,000 to manufacture were sold on account for $120,000.



Journalize the above transactions for Gray Corporation.

Ex.  118

Watson Manufacturing Company employs a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:


1.   Direct materials requisitioned during the month:

                  Job 101                $22,000

                  Job 102                  16,000

                  Job 103                  24,000



2.   Direct labor incurred and charged to jobs during the month was:

                  Job 101                $30,000

                  Job 102                  26,000

                  Job 103                  20,000



3.   Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 75% of direct labor costs.


4.   Actual manufacturing overhead costs incurred during the month amounted to $66,000.


5.   Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during the month.

Ex.  118  (cont.)


(a)   Prepare journal entries to record the above transactions.

(b)   Answer the following:

1.    How much manufacturing overhead was applied to Job 103 during the month?

2.    Compute the unit cost of Jobs 101 and 103.

3.    What is the balance in Work In Process Inventory at the end of the month?

4.    Determine if manufacturing overhead was under- or overapplied during the month. How much?

Ex.  119

The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2002:

                                                                     Beginning                 Ending


            Raw materials                                    $17,000                 $19,000

            Work in process                                     9,000                   14,000

            Finished goods                                     11,000                     8,000

                  Total                                             $37,000                 $41,000


In addition, the following transactions occurred in 2002:

1.   Raw materials purchased on account, $75,000.

2.   Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable).

3.   Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $6,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation).

4.   Assigned $80,000 of factory labor to jobs.

5.   Applied $32,000 of overhead to jobs.



(a)   Journalize the above transactions.

(b)   Reproduce the manufacturing cost and inventory accounts.  Use T-accounts.

(c)   From an analysis of the accounts, compute the following:

        1.   Raw materials used.

        2.   Completed jobs transferred to finished goods.

        3.   Cost of goods sold.

        4.   Under- or overapplied overhead.

Ex.  120

Job cost sheets for Howard Manufacturing are as follows:




            Job No 210                                                                             Quantity    1,500



              Date        Direct Materials              Direct Labor                Overhead  

            July   1               7,000                           8,000                         12,000

                      8               7,800

                    10                                                 10,000

                    15               6,500

                    25                                                 15,000



            Job No 211                                                                             Quantity    1,200



              Date        Direct Materials              Direct Labor                Overhead  

            July   1               4,000                           6,000                           9,000

                    10               9,000

                    15                                                   8,000

                    20               7,000

                    27                                                 12,000

Ex.  120  (cont.)


(a)   Answer the following questions:

        1.  What was the balance in Work in Process Inventory on July 1 if these were the only unfinished jobs?

        2.  What was the predetermined overhead rate in June if overhead was applied on the basis of direct labor cost?

        3.  If July is the start of a new fiscal year and the overhead rate is 20% higher than in the preceding year, how much overhead should be applied to Job 210 in July?

        4.  Assuming Job 210 is complete, what is the total and unit cost of the job?

        5.  Assuming Job 211 is the only unfinished job at July 31, what is the balance in Work in Process Inventory on this date?


(b)   Journalize the summary entries to record the assignment of costs to the jobs in July.             (Note: Make one entry in total for each manufacturing cost element.)



Ex.  121

Garner Company begins operations on July 1, 2002. Information from job cost sheets shows the following:

Manufacturing Costs Assigned

Job No.                          July                                 August                            September

   100                          $12,000                               $8,800

   101                              7,800                                 9,700                             $12,000

   102                              5,000

   103                                                                      11,800                                 6,000

   104                                                                        5,800                                 7,000


Job 102 was completed in July.  Job 100 was completed in August, and Jobs 101 and 103 were completed in September. Each job was sold for 60% above its cost in the month following completion.



(a)     Compute the balance in Work in Process Inventory at the end of July.

(b)     Compute the balance in Finished Goods Inventory at the end of September.

(c)     Compute the gross profit for August.


Ex.  122

The accounting records of Roland Manufacturing Company include the following information:

                                                                            Dec. 31                         Jan. 1 

         Work in process inventory                        $  20,000                     $  50,000

         Finished goods inventory                            120,000                       140,000

         Direct materials used                                  350,000

         Direct labor                                                 160,000

         Selling expenses                                         125,000


Manufacturing overhead is applied at a rate of 150% of direct labor cost.


Ex.  122  (cont.)


Answer the following questions:

1.   What are the total of the debits to Work in Process Inventory during the year?

2.   What is the amount transferred to Finished Goods Inventory during the year?

3.   What is the cost of goods sold?


Ex.  123

Stoll Manufacturing, Inc. uses a job order costing system. The company uses predetermined overhead rates in applying manufacturing overhead to individual jobs. The predetermined overhead rate in Department X is based on direct labor hours, the rate in Department Y is based on machine hours, and the rate in Department Z is based on direct labor cost. At the beginning of the most recent year, members of Stoll’s management team made the following estimates for the year:


                                                                                 X                      Y                      Z      

Direct labor hours                                                  80,000             26,000             60,000

Machine hours                                                       50,000             85,000             23,000

Direct labor cost                                                 $400,000         $150,000         $800,000

Direct materials                                                  $200,000         $  26,000         $  42,000

Manufacturing overhead                                   $560,000         $340,000         $240,000


a.   Compute the predetermined overhead rates for Departments X, Y, and Z.


Ex.  123  (cont.)

b.   Stoll Manufacturing’s records show the following information for Job #6854, which was entered into production on January 17 and completed on March 7.


                                                                                 X                      Y                      Z      

Direct labor hours                                                      420                    54                  375

Machine hours                                                           200                  120                  125

Direct labor cost                                                   $2,400             $1,080             $1,390

Direct materials                                                    $   842             $1,260             $2,065


Compute the total manufacturing overhead applied to Job #6854.


c.   On December 31, Stoll showed the following actual costs and operating data for all jobs worked on during the year:


                                                                                 X                      Y                      Z      

Direct labor hours                                                  76,000             28,920             63,000

Machine hours                                                       54,000             87,200             21,000

Direct labor cost                                                 $395,200         $138,000         $815,000

Direct materials                                                  $215,900         $  24,380         $  39,080

Manufacturing overhead                                   $540,000         $345,000         $254,000


Compute the amount of under- or overapplied overhead in each department at the end of the year and indicate whether it is under- or overapplied.

Ex.  124

Mr. J. G. Pigg, III is the sole owner of a brick company that manufactures custom bricks used in upscale homes. No two customers have the same type of bricks. The bricks go through three processes: mixing, shaping, and firing. The company uses a job order cost system and computes a predetermined overhead rate in each department. The mixing department bases its rate on direct materials, the shaping department bases its rate on machine hours, and the firing department bases its rate on direct labor hours. At the beginning of the year, the company made the following estimates:


                                                                       Mixing               Shaping              Firing           

Direct labor hours                                           80,000                45,000            60,000

Machine hours                                                30,000                70,000            21,000

Direct materials                                          $300,000            $  40,000          $15,000

Manufacturing overhead                            $150,000            $140,000          $75,000


a.   Compute the predetermined overhead rate to be used in each department during the upcoming year.


b.   Assume the overhead rates that you computed in a. above are in effect.  Compute the total overhead cost to be assigned to Dr. Snout’s order—Job #5417, assuming the following data:



                                                                       Mixing               Shaping              Firing           

Direct labor hours                                              300                         80                   92

Machine hours                                                     80                       120                 120

Direct materials                                             $6,000                     $120               $300


c.   If actual overhead incurred totaled $3,500, compute the amount of over- or underapplied manufacturing overhead.


Ex.  125

Landis Company uses a job order cost system in each of its two manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department A and machine hours in Department B.


In establishing the predetermined overhead rates for 2002, the following estimates were made for the year:


                                                                                      A                                  B              

      Manufacturing overhead                                $2,100,000                  $1,600,000

      Direct labor cost                                                1,200,000                    1,200,000

      Direct labor hours                                                100,000                       100,000

      Machine hours                                                     200,000                       400,000


During January, the job cost sheet showed the following costs and production data:


                                                                                        A                                 B      

      Direct materials used                                         $195,000                     $128,000

      Direct labor cost                                                   100,000                       110,000

      Manufacturing overhead incurred                       180,000                       135,000

      Direct labor hours                                                    8,000                           8,400

      Machine hours                                                       16,000                         34,000



(a)    Compute the predetermined overhead rate for each department.

(b)    Compute the total manufacturing cost assigned to jobs in January in each department.


(c)    Compute the balance in the Manufacturing Overhead account at the end of January and indicate whether overhead is over- or underapplied.

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