1.

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Entries for Costs in a Job Order Cost System

Munson Co. uses a job order cost system. The following data summarize the operations related to production for July:

1. Materials purchased on account, $729,170
2. Materials requisitioned, $612,500, of which $79,630 was for general factory use
3. Factory labor used, $751,050, of which $142,700 was indirect
4. Other costs incurred on account for factory overhead, $175,000; selling expenses, $269,790; and administrative expenses, $160,420
5. Prepaid expenses expired for factory overhead, $33,540; for selling expenses, $28,440; and for administrative expenses, $20,420
6. Depreciation of office building was $97,710; of office equipment, $49,580; and of factory equipment, $33,540
7. Factory overhead costs applied to jobs, $415,630
8. Jobs completed, $962,500
9. Cost of goods sold, $933,340

Required:

Journalize the entries to record the summarized operations. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Materials purchased on account, $729,170.

Entry	Description	Debit	Credit
a.	Cash	fill in the blank 2
	Finished Goods		fill in the blank 4

b. Materials requisitioned, $612,500, of which $79,630 was for general factory use.

Entry	Description	Debit	Credit
b.		fill in the blank 6	fill in the blank 7
		fill in the blank 9	fill in the blank 10
		fill in the blank 12	fill in the blank 13

c. Factory labor used, $751,050, of which $142,700 was indirect.

Entry	Description	Debit	Credit
c.		fill in the blank 15	fill in the blank 16
		fill in the blank 18	fill in the blank 19
		fill in the blank 21	fill in the blank 22

d. Other costs incurred on account for factory overhead, $175,000; selling expenses, $269,790; and administrative expenses, $160,420.

Entry	Description	Debit	Credit
d.		fill in the blank 24	fill in the blank 25
		fill in the blank 27	fill in the blank 28
		fill in the blank 30	fill in the blank 31
		fill in the blank 33	fill in the blank 34

e. Prepaid expenses expired for factory overhead, $33,540; for selling expenses, $28,440; and for administrative expenses, $20,420.

Entry	Description	Debit	Credit
e.		fill in the blank 36	fill in the blank 37
		fill in the blank 39	fill in the blank 40
		fill in the blank 42	fill in the blank 43
		fill in the blank 45	fill in the blank 46

f. Depreciation of office building was $97,710; of office equipment, $49,580; and of factory equipment, $33,540.

Entry	Description	Debit	Credit
f.		fill in the blank 48	fill in the blank 49
		fill in the blank 51	fill in the blank 52
		fill in the blank 54	fill in the blank 55
		fill in the blank 57	fill in the blank 58

g. Factory overhead costs applied to jobs, $415,630.

Entry	Description	Debit	Credit
g.		fill in the blank 60
			fill in the blank 62

h. Jobs completed, $962,500.

Entry	Description	Debit	Credit
h.		fill in the blank 64
			fill in the blank 66

i. Cost of goods sold, $933,340.

Entry	Description	Debit	Credit
i.		fill in the blank 68
			fill in the blank 70

2.

Flow of Costs and Income Statement

Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $818,100 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $1,908,900 advertising the product through these infomercials. In addition, the company incurred $818,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8.

Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows:

Hardened steel blanks (used for knife shaft and blade)	$2.00
Wood (for handle)	0.70
Packaging	0.70

The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 1,440 knives.

After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.30 per unit.

The knives are sold to stores. Each store is given promotional materials such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.3 per knife.

Total completed production was 606,000 units during the year. Other information is as follows:

Number of customers (stores)	25,800
Number of knives sold	515,100
Wholesale price (to store) per knife	$18

Factory overhead cost is applied to jobs at the rate of $720 per stamping machine hour after the knife blanks are stamped. There were an additional 151,500 stamped knives, handles, and cases waiting to be assembled on December 31, 20Y8.

In your computations, if required, round interim per unit costs to two decimal places.

Required:

1. Prepare an annual income statement for the Kitchen Ninja knife series.

Ginocera Inc.
Income Statement
For the Year Ended December 31, 20Y8
Sales			$fill in the blank 91c4bafe206f059_2
Cost of goods sold			fill in the blank 91c4bafe206f059_4
Gross profit			$fill in the blank 91c4bafe206f059_6
Selling expenses:
Infomercial campaign	$fill in the blank 91c4bafe206f059_8
Promotional materials	fill in the blank 91c4bafe206f059_10
Shipping expenses	fill in the blank 91c4bafe206f059_12
Total selling expenses		$fill in the blank 91c4bafe206f059_13
Administrative expenses:
Legal expenses		fill in the blank 91c4bafe206f059_15
Total operating expenses			fill in the blank 91c4bafe206f059_16
Income from operations			$fill in the blank 91c4bafe206f059_17

3.

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   High-Low Method

   Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:

   Units Produced			Total Costs
   5,075			$411,600
   1,575			264,600
   2,990			277,240

   a. Determine the variable cost per unit and the total fixed cost.

   Variable cost: (Round to the nearest dollar.)	$fill in the blank 1 per unit
   Total fixed cost:	$fill in the blank 2

   b. Based on part (a), estimate the total cost for 2,390 units of production.

   Total cost for 2,390 units:

   $fill in the blank 3

4.

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   Sales Mix and Break-Even Sales

   Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $638,600, and the sales mix is 30% bats and 70% gloves. The unit selling price and the unit variable cost for each product are as follows:

   Products	Unit Selling Price		Unit Variable Cost
   Bats	$80		$60
   Gloves	200		120

   a. Compute the break-even sales (units) for both products combined. fill in the blank 1 units

   b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point?

   Baseball bats	fill in the blank 2 units
   Baseball gloves	fill in the blank 3 units

5.

Break-Even Sales and Sales to Realize Income from Operations

For the current year ending October 31, Yentling Company expects fixed costs of $422,400, a unit variable cost of $50, and a unit selling price of $74.

a. Compute the anticipated break-even sales (units). fill in the blank 1 units

b. Compute the sales (units) required to realize income from operations of $96,000. fill in the blank 2 units

6.

Break-Even Analysis

The Junior League of Yadkinville, California, collected recipes from members and published a cookbook entitled Food for Everyone. The book will sell for $16 per copy. The chairwoman of the cookbook development committee estimated that the club needed to sell 7,300 books to break even on its $43,800 investment. What is the variable costs per unit assumed in the Junior Leagues analysis? (Round your answer to the nearest whole number.) $fill in the blank 1 per unit