Hornberg Cost Accounting Ch4

*Please fill in the blanks and include calculations with explanations for the calculations. Thank you.

Side-by-side prints custom training material for corporations. The business was started January 1,2017. The company uses a normal- costing system. It has two direct- cost pools., materials, and labor, and one indirect- cost pool, overhead. Overhead is charged to printing jobs on the basis of direct labor cost. Side-by-side has no finished goods inventories because all printing jobs are transferred to cost of goods sold when completed.

Data table:

Budgeted Direct labor costs $250,000

Budgeted Overhead costs $400,000

Costs of actual material used $163,000

Actual direct labor costs $241,000

Actual overhead costs $388,400

There were two jobs in process on December 31,2017: Job 11 @ Job 12 costs added to each job as of December 31 are as follows:

Data table:

.....................................Job 11 Job 12

Direct Materials .......... $4,540 $5,270

Direct labor.............. $6,400 $6,200

Requirement 1

Compute the overhead allocation rate. Select the formula and enter the amounts to calculate the overhead allocation rate.

______________/______________=Overhead allocation rate

_____________/_____________ _=________________

Requirement 2

Calculate the balance in ending work in process and costs of goods sold before any adjustments for under-or-over allocated overhead.

................................................... Job 11..................... Job 12 ........................Total Cost

Direct Materials _______________ _____________ _________________

Direct Labor _______________ ____________ _________________

Overhead ______________ _____________ ________________

Ending work in process _______________ _____________ ________________

Before calculating the cost of goods sold, lets determine the total manufacturing costs incurred during the period.

Direct Materials ______________

Direct Labor _______________

Overhead allocated ________________

Total Manufacturing ________________

Costs

Now select the formula and enter the amounts to calculate cost of goods sold before any adjustments for under -or- over allocated overhead.

_______________ + _______________= Costs of goods sold

_______________ + _______________= ______________

Requirement 3

Calculate under-or-over allocated overhead

Select the formula and enter the amounts to calculate under-or-overallocated overhead

_____________ - _______________= Under-(Over) allocated overhead

_____________ - _______________= ______________

Requirement 4

Calculate the ending balances in work in process and cost of goods sold if the under-or-overallocated overhead amount is as follows.

Complete the table below to show the ending balances in work in process and cost of goods sold if the under-or-overallocated overhead amount is written off to cost of goods sold.

Account Balance Write-off Account Balance

(Before write off) of Over-or Underallocated Overhead ...........(After Write-off)

Acct

Work in process ...... __________....... __________ ......._____________

Cost of goods sold....... _______...... __________......... _______________

Total.......... ____________....... ___________.......... _____________

b)Complete the table below to show the ending balances in work in process and cost of goods sold if the under-or-over allocated overhead amount is prorated using the overhead allocated in 2017 (before proration) in the ending balances of cost of goods sold and work in process control accounts.

........................Account Allocated Overhead Allocated Overhead Proration of.................. Account

.......................Balance Included in Each Included in Each....... Over-or .........................Balance

.......................(Before Account Balance Account Balance...... Underallocated..................... (After

Account ..........Proration) (Before Proration) .......As a % of Total Overhead Proration)

Work in process ....._______...... _______...... ________%....... _______...... _________

Cost of goods sold.. ______..... _______...... ________ % ......___________ ..... _________

Total..... _________ ......____________....... _____________ %..... ____________ ....... __________

Requirement 5

Which of the methods in requirement 4 would you choose? Explain

Writing off all the over-or-under allocated overhead to Cost of Goods Sold(CGS) is ___________ when CGS is large relative to Work-in-Process Inventory and the over-or-underallocated overhead is immaterial. ____________these conditions apply in this case. Side-by-Side Company should

________________________________________________.