Question
General instruction show all necessary steps Q1. Durham Companys trial balance as of January 1, the beginning of the current year, is given below: Direct
General instruction show all necessary steps
Q1. Durham Companys trial balance as of January 1, the beginning of the current year, is given below:
Direct labor . . . . . . . . . . . . . . . . $40,000
Indirect labor . . . . . . . . . . . . . . . $18,000
Sales commissions . . . . . . . . . . $10,400
Administrative salaries . . . . . . . $25,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000
Accounts Receivable . . . . . . . . . . . . 13,000
Raw Materials . . . . . . . . . . . . . . . . . 7,000
Work in Process . . . . . . . . . . . . . . . . 18,000
Finished Goods . . . . . . . . . . . . . . . . 20,000
Prepaid Insurance . . . . . . . . . . . . . . 4,000
Plant and Equipment . . . . . . . . . . . . 230,000
Accumulated Depreciation . . . . . .. . $ 42,000
Accounts Payable . . . . . . . . . . . . . . 30,000
Capital Stock . . . . . . . . . . . . . . . .. . . 150,000
Retained Earnings . . . . . . . . . . . . . ... 78,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . $300,000 $300,000
Durham Company uses a job-order costing system. During the year, the following transactions took place:
a. Raw materials purchased on account, $45,000.
b. Raw materials requisitioned for use in production, $40,000 (80% direct and 20% indirect).
c. Factory utility costs incurred $14,600.
d. Depreciation recorded on plant and equipment, $28,000. Three-fourths of the depreciation relates
to factory equipment, and the remainder relates to selling and administrative equipment.
e. Costs for salaries and wages were incurred as follows
Direct labor . . . . . . . . . . . . . . . . $40,000
Indirect labor . . . . . . . . . . . . . . . $18,000
Sales commissions . . . . . . . . . . $10,400
Administrative salaries . . . . . . . $25,000
f. Prepaid insurance expired during the year, $3,000 (80% relates to factory operations, and 20%
relates to selling and administrative activities).
g. Miscellaneous selling and administrative expenses incurred, $18,000.
h. Manufacturing overhead was applied to production. The company applies overhead on the basis
of 150% of direct labor cost.
i. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to
the finished goods warehouse.
j. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold on
account for $200,000.
k. Collections from customers during the year totaled $197,000.
l. Payments to suppliers on account during the year, $100,000; and payments to employees for
salaries and wages, $90,000.
Required:
1. Prepare a T-account for each account in the companys trial balance, and enter the opening
Balances shown above.
2. Record the transactions above directly into the T-accounts. Prepare new T-accounts as needed.
Key your entries to the letters (a) through (l) above. Find the ending balance in each account.
3. Is manufacturing overhead under applied or over applied for the year? Make an entry in the
T-accounts to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufactured;
all of the information needed for the income statement is available in the T-accounts you
have prepared.)
Q2. The PVC Company manufactures a high-quality plastic pipe in two departments, Cooking and Molding.
Materials are introduced at various points during work in the Cooking Department. After the cooking is completed, the materials are transferred into the Molding Department, in which pipe is formed.
Selected data relating to the Cooking Department during May are given below:
Production data:
Pounds in process, May 1: materials 100%
complete, conversion 90% complete . . . . . . . . . . . . . . . . . . . 70,000
Pounds started into production during May . . . . . . . . . . . . . . . . 350,000
Pounds completed and transferred to Molding . . . . . . . . . . . . . ?
Pounds in process, May 31: materials 75% complete,
conversion 25% complete . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Cost data:
Work in process inventory, May 1:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $86,000
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,000
Cost added during May:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $447,000
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $198,000
By using weighted-average method and FIFO method.
Required:
1. Compute the equivalent units of production.
2. Compute the costs per equivalent unit for May.
3. Determine the cost of ending work in process inventory and of the units transferred to the Molding
Department.
General instruction show all necessary steps
Q1. Durham Companys trial balance as of January 1, the beginning of the current year, is given below:
Direct labor . . . . . . . . . . . . . . . . $40,000
Indirect labor . . . . . . . . . . . . . . . $18,000
Sales commissions . . . . . . . . . . $10,400
Administrative salaries . . . . . . . $25,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000
Accounts Receivable . . . . . . . . . . . . 13,000
Raw Materials . . . . . . . . . . . . . . . . . 7,000
Work in Process . . . . . . . . . . . . . . . . 18,000
Finished Goods . . . . . . . . . . . . . . . . 20,000
Prepaid Insurance . . . . . . . . . . . . . . 4,000
Plant and Equipment . . . . . . . . . . . . 230,000
Accumulated Depreciation . . . . . .. . $ 42,000
Accounts Payable . . . . . . . . . . . . . . 30,000
Capital Stock . . . . . . . . . . . . . . . .. . . 150,000
Retained Earnings . . . . . . . . . . . . . ... 78,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . $300,000 $300,000
Durham Company uses a job-order costing system. During the year, the following transactions took place:
a. Raw materials purchased on account, $45,000.
b. Raw materials requisitioned for use in production, $40,000 (80% direct and 20% indirect).
c. Factory utility costs incurred $14,600.
d. Depreciation recorded on plant and equipment, $28,000. Three-fourths of the depreciation relates
to factory equipment, and the remainder relates to selling and administrative equipment.
e. Costs for salaries and wages were incurred as follows
Direct labor . . . . . . . . . . . . . . . . $40,000
Indirect labor . . . . . . . . . . . . . . . $18,000
Sales commissions . . . . . . . . . . $10,400
Administrative salaries . . . . . . . $25,000
f. Prepaid insurance expired during the year, $3,000 (80% relates to factory operations, and 20%
relates to selling and administrative activities).
g. Miscellaneous selling and administrative expenses incurred, $18,000.
h. Manufacturing overhead was applied to production. The company applies overhead on the basis
of 150% of direct labor cost.
i. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to
the finished goods warehouse.
j. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold on
account for $200,000.
k. Collections from customers during the year totaled $197,000.
l. Payments to suppliers on account during the year, $100,000; and payments to employees for
salaries and wages, $90,000.
Required:
1. Prepare a T-account for each account in the companys trial balance, and enter the opening
Balances shown above.
2. Record the transactions above directly into the T-accounts. Prepare new T-accounts as needed.
Key your entries to the letters (a) through (l) above. Find the ending balance in each account.
3. Is manufacturing overhead under applied or over applied for the year? Make an entry in the
T-accounts to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufactured;
all of the information needed for the income statement is available in the T-accounts you
have prepared.)
Q2. The PVC Company manufactures a high-quality plastic pipe in two departments, Cooking and Molding.
Materials are introduced at various points during work in the Cooking Department. After the cooking is completed, the materials are transferred into the Molding Department, in which pipe is formed.
Selected data relating to the Cooking Department during May are given below:
Production data:
Pounds in process, May 1: materials 100%
complete, conversion 90% complete . . . . . . . . . . . . . . . . . . . 70,000
Pounds started into production during May . . . . . . . . . . . . . . . . 350,000
Pounds completed and transferred to Molding . . . . . . . . . . . . . ?
Pounds in process, May 31: materials 75% complete,
conversion 25% complete . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Cost data:
Work in process inventory, May 1:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $86,000
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,000
Cost added during May:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $447,000
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $198,000
By using weighted-average method and FIFO method.
Required:
1. Compute the equivalent units of production.
2. Compute the costs per equivalent unit for May.
3. Determine the cost of ending work in process inventory and of the units transferred to the Molding
Department.
2. Net realizable value method. Convad Company is one of the worlds leading corn refiners. It produces
Durham Company uses a job-order costing system. During the year, the following transactions took place:
Durham Company uses a job-order costing system. During the year, the following transactions took place:
a. Raw materials purchased on account, $45,000.
b. Raw materials requisitioned for use in production, $40,000 (80% direct and 20% indirect).
c. Factory utility costs incurred $14,600.
d. Depreciation recorded on plant and equipment, $28,000. Three-fourths of the depreciation relates
to factory equipment, and the remainder relates to selling and administrative equipment.
e. Costs for salaries and wages were incurred as follows
Direct labor . . . . . . . . . . . . . . . . $40,000
Indirect labor . . . . . . . . . . . . . . . $18,000
Sales commissions . . . . . . . . . . $10,400
Administrative salaries . . . . . . . $25,000
f. Prepaid insurance expired during the year, $3,000 (80% relates to factory operations, and 20%
relates to selling and administrative activities).
g. Miscellaneous selling and administrative expenses incurred, $18,000.
h. Manufacturing overhead was applied to production. The company applies overhead on the basis
of 150% of direct labor cost.
i. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to
the finished goods warehouse.
j. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold on
account for $200,000.
k. Collections from customers during the year totaled $197,000.
l. Payments to suppliers on account during the year, $100,000; and payments to employees for
salaries and wages, $90,000.
Required:
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