1. The comparative balance sheet for Chelsea Company appears below: Chelsea Company Comparative Balance Sheet Dec. 31, 2010 Dec. 31, 2009 Assets Cash $51,000 $17,000 Accounts receivable 6,000 8,000 Inventory 10,000 7,000 Prepaid expenses 2,000 3,000 Building 30,000 15,000 Accumulated depreciationbuilding (3,000) (2,000) Total assets $96,000 $48,000 Liabilities and Stockholders' Equity Accounts payable $ 3,000 $ 5,000 Long-term note payable 12,000 13,000 Common stock 38,000 18,000 Retained earnings 43,000 12,000 Total liabilities and stockholders' equity $96,000 $48,000 The income statement for the year is as follows: Chelsea Company Income Statement For the Year Ended December 31, 2010 Sales (all on credit) $410,000 Expenses and losses Cost of goods sold $252,000 Operating expenses, exclusive of depreciation 94,300 Depreciation expense 1,000 Interest expense 1,200 Loss on sale of land 2,500 Income taxes 9,000 Total expenses and loss 360,000 Net income $ 50,000 Cash dividends of $19,000 were paid during the year. Land costing $20,000 was acquired by the issuance of common stock. The property was subsequently sold for $17,500 cash. (HINT: The acquisition of the land should be disclosed in a footnote only. The loss on the sale of the land will be added back under the Operating section of the cash flow. The proceeds received will be recorded under Investing.) Instructions Prepare a statement of cash flows for the year ended December 31, 2010 using the indirect method. 2. Costly Manufacturing uses a job order cost accounting system. On Oct 1, the company has a balance in Work in Process Inventory of $6,500 and two jobs in process: Job No. 329, $4,000 and Job No. 330, $2,500. During Oct, a summary of source documents reveals the following: For Materials Requisition Slips Labor Time Tickets Job No. 329 $ 2,500 $ 8,400 Job No. 330 3,600 3,400 Job No. 331 4,400 3,200 Job No. 332 3,000 3,000 General Use 1,000 1,500 $14,500 $19,500 Costly Manufacturing applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 329 is completed during the month. Instructions (a) Prepare summary journal entries to record the requisition slips, time tickets, the assignment of manufacturing overhead to jobs, and the completion of Job No. 329. Show computations. (b) Answer the following questions. 1. What is the balance in Work in Process Inventory at Oct 31? 2. If Costly Manufacturing incurred $8,000 of manufacturing overhead in addition to indirect materials and indirect labor, was overhead over- or underapplied in Oct and by how much? 3. Without regard to your answer in (2) above, assume manufacturing overhead was underapplied in Oct. How would this amount be reported in the company's monthly financial statements at Oct 31? 3. The Detailing Department of Jackson Manufacturing Company has the following production and manufacturing cost data for February. Production: Beginning inventory 5,000 units that are 100% complete as to materials and 30% complete as to conversion costs; units started into production 15,000; ending inventory of 4,000 units that are 30% complete as to conversion costs. Manufacturing Costs: Beginning work in process inventory of $50,000, comprised of $30,000 of materials and $20,000 of conversion costs. Materials added during the month, $94,000; labor and overhead applied during the month, $72,000 and $45,000, respectively. Instructions (a) Compute the equivalent units of production for materials and conversion costs for the month of February. (b) Compute the unit costs for materials and conversion costs. (c) Determine the costs to be assigned to the units transferred out and ending work in process. 4. Julius Company developed the following standard costs for its product for 2012 Standard Cost Card Unit Standard Cost Direct materials (6 pounds @ $3 per pound) $18 Direct labor (4 hours @ $10 per hour) 40 Manufacturing overhead Variable (5 hours @ $4 per hour) 20 Fixed (3 hours @ $3 per hour) 9 $87 The company planned to work 220,000 direct labor hours and produce 55,000 units of product in 2012. Actual results for 2012 are as follows: 52,000 units of product were produced. Actual direct materials purchased and used during the year amounted to 320,000 pounds at a cost of $951,600. Actual direct labor costs were $1,800,000 for 170,000 direct labor hours worked. Total actual manufacturing overhead incurred amounted to $1,435,000. Instructions Calculate the following variances showing all computations supporting your answers. Indicate if the variances are favorable (F) or unfavorable (U). (a) Direct materials price and direct material quantity variances. (b) Direct labor price and direct labor quantity variances. (c) Overhead controllable and overhead volume variances