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FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E17-17 Compute the following balances for Spring: a. Work-in-Process Inventory at July 31 b. Finished Goods Inventory at July 31 c. Cost of Goods Sold for July Solution: (a) Job 3 Total Work-in-Process Inventory Cost xx xx Chapter 17: Job Order Costing (b) Job 4 Total Finished Goods Inventory Cost xx xx (c) Job 1 2 Total Cost of Goods Sold Cost xx xx xx Page 1 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E17-18 Journalize the entries relating to materials and labor. Solution: Date Accounts and Explanation Raw Materials Inventory Accounts Payable Purchase of raw materials on account Debit xx Work-in-Process inventory Manufacturing Overhead Raw Materials Inventory Raw materials used in production xx xx Work-in-process inventory Manufacturing overhead Wages Payable Labor incured in production xx xx Chapter 17: Job Order Costing Page 2 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Credit xx xx xx Chapter 17: Job Order Costing Page 3 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition How many machine hours did Bob's Boats use in 2016? Was manufacturing overhead overallocated or underallocated for the year and by how much? Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Allocated manufacturing overhead xx Allocation overhead xx Date Dec. 31 / / predetermined overhead allocation rate = xx per Machince hour = - Actual overhead - xx Accounts and Explanation Cost of Goods Sold Manufacturing Overhead Chapter 17: Job Order Costing machine hrs xx = = xx Debit xx Credit xx Page 4 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E17-26 Analyze the following T-accounts, and determine the missing amounts. Solution: a. b. c. d. e. f. g. Chapter 17: Job Order Costing Page 5 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 17: Job Order Costing Page 6 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E18-24 Requirements 1. Compute the equivalent units of production for direct materials and for conversion costs for the Mixing Department. 2. Compute the equivalent units of production for transferred in costs, direct materials, and conversion costs for the Heating Department. Solution: Requirement 1 Mixing Department Completed Units: xx units x 100% In process units: xx units x 65% Total EUP for direct materials: = = = xx xx $89,750 Completed Units: xx units x 100% In Process units: xx units x 25% Total EUP for conversion costs: = = = xx xx $83,750 completed units: xx units x 100% In process units: xx units x 100% Total EUP for transferred in = = = xx xx $88,000 Completed units: xx units x 100% In process units: xx units x 75% Total EUP for direct materials: = = = xx xx $85,000 Completed units: xx units x 100% In process units: xx units x 60% Total EUP for conversion costs: = = = xx xx $83,200 Requirement 2 Heating Department Chapter 18: Process Costing Page 1 of 3 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition nd for conversion ts, direct materials, Chapter 18: Process Costing Page 2 of 3 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E18-27 Prepare the journal entries for Galvan Company. Solution: Date Nov. 30 Accounts and Explanation Work-in-process inventory - Stamping Work-in-process inventory - cutting Transfer costs assigned to units transferred Debit xx Work-in-process inventory - polishing work-in-process inventory - stamping transfer costs assigned to units transferred xx Finished goods inventory work-in-process inventory - polishing transfer costs assigned to finished goods xx Accounts Receivable Sales Record sales for the month xx Cost of Good Sold (xx * 40%) Finished goods inventory Units sold, costs assigned to COGS xx Chapter 18: Process Costing Credit xx xx xx xx xx Page 3 of 3 1) _______ 2) _______ 3) _______ 4) _______ 5) _______ 6) _______ 7) _______ 8) _______ 9) _______ 10) _______ 11) _______ 12) _______ 13) _______ 14) _______ 15) _______ 16) _______ 17) _______ 18) _______ 19) _______ 20) _______ 21) _______ 22) _______ 23) _______ 24) _______ 25) _______ 26) _______ 27) _______ 28) _______ 29) _______ 30) _______ 31) _______ 32) _______ 33) _______ 34) _______ 35) _______ 36) _______ 37) _______ 38)_______ 39) _______ 40) _______ 41) _______ 42) _______ 43) _______ 44) _______ 45) _______ 46) _______ 47) _______ 48) _______ 49) _______ 50) _______ 51) _______ 52) _______ 53) _______ 54) _______ 55) _______ 56) _______ 57) _______ 58) _______ 59) _______ 60) _______ 61) _______ 62) _______ 63) _______ 64) _______ 65) _______ 66) _______ 67) _______ 68) _______ 69) _______ 70) _______ 71) _______ 72) _______ 73) _______ 74) _______ 75)________ 76)________ 77)________ 78)________ 79)________ 80)________ 81) Mason Cabinet Company Income Statement Year Ended December 31, 2015 Sales Revenue ________ Cost of Goods Sold: Beginning Merchandise Inventory ________ Purchases ________ Cost of Goods Available for Sale _______ Ending Merchandise Inventory (______) Cost of Goods Sold ________ Gross Profit ________ Selling and Administrative Expenses Operating Income HINT: Unit cost for one cabinet = Cost of goods gold / Total units sold 82) Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory Direct Materials Used: Beginning Raw Materials Inventory Purchases of Raw Materials Raw Materials Available for Use Ending Raw Materials Inventory Direct Materials Used Direct Labor Manufacturing Overhead: Indirect Materials Indirect Labor DepreciationPlant and Equip. Plant Utilities and Insurance Total Manufacturing Overhead Total Manufacturing Costs Incurred During the Year ________ ___________ Total Manufacturing Costs to Account For Ending Work-in-Process Inventory Cost of Goods Manufactured 83) Managers of a Need to know the cost to Bakery Computer manufacturer Bank Seamstress 84) Answer: Item a. Accounts and Explanation Advertising Expenses Cash b. Work-in-Process Inventory Manufacturing Overhead Wages Payable c. Raw Materials Inventory Accounts Payable d. Work-in-Process Inventory Manufacturing Overhead Raw Materials Inventory e. Manufacturing Overhead Accumulated DepreciationPlant Manufacturing Overhead Prepaid Insurance Manufacturing Overhead Property Tax Payable Debit Credit f. Work-in-Process Inventory Manufacturing Overhead g. Finished Goods Inventory Work-in-Process Inventory h. Accounts Receivable Sales Revenue Cost of Goods Sold Finished Goods Inventory i. Cost of Goods Sold Manufacturing Overhead 85) Answer: Work-in-Process InventoryDepartment I Work-in-Process InventoryDepartment II Manufacturing Overhead Raw Materials Inventory Materials used, direct materials assigned to WIP, indirect materials accumulated in MOH 1) Managerial accounting focuses on providing information for internal planning and control a. True b. False 2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides information to external stakeholders a. True b. False 3) Managerial accounting reporting by a public firm is required to follow the rules of GAAP and guidelines of the Securities and Exchange Commission. a. True b. False 4) Management accountability is the manager's responsibility to the various stakeholders of the company to maximize profits. a. True b. False 5) ERP systems can integrate all of a company's functions, departments, and data into a single system. a. True b. False 6) The IMA standards of ethical practice require managerial accountants to maintain their professional competence. a. True b. False 7) The accountant for Myra Lido deliberately recorded operating expenses as operating assets in order to record a higher net income for the company. As long as the amount of the misstatement was not material, this would not be considered unethical behavior. a. True b. False 8) Service companies sell their time, skills, and knowledge. a. True b. False 9) Unlike merchandising companies, income statements of service companies include cost of goods sold as a line item. a. True b. False 10)Royal, Inc. purchases each unit of product X for $100 and can sell it in the market for $135. The price of the product for Royal would be $100. a. True b. False 11)The primary activity of manufacturing companies is to purchase goods from a wholesaler and resell them. a. True b. False 12)Manufacturing companies produce their own products, but merchandising companies do not. a. True b. False 13)The cost of direct materials cannot easily be traced to the manufactured product, and therefore, it is a component of manufacturing overhead. a. True b. False 14)In manufacturing, the cost objects are often units of product. a. True b. False 15)Accounting firms, building contractors, and healthcare providers use process costing. a. True b. False 16)A job order costing system is used by companies that manufacture batches of unique products or provide specialized services a. True b. False 17)When direct materials are received on the production floor, they are recorded on the job cost record. a. True b. False 18)When raw materials are requisitioned for a job, the Raw Materials Inventory account is debited. a. True b. False 19)The actual direct labor costs are assigned to individual jobs, and the actual direct labor cost is recorded with a debit to Work-in-Process Inventory. a. True b. False 20)Actual manufacturing overhead costs are credited to the Manufacturing Overhead account. a. True b. False 21)The amount of taxes and insurance incurred and paid for the plant of a manufacturing company should be debited to the Manufacturing Overhead account. a. True b. False 22)Manufacturing overhead costs are allocated to the Work-in-Process Inventory account by a debit to the Manufacturing Overhead account. a. True b. False 23)Manufacturing overhead is allocated by debiting the Work-in-Process Inventory account and crediting the Manufacturing Overhead account. a. True b. False 24)The cost of goods manufactured is recorded with a debit to the Work-in-Process Inventory account and a credit to the Cost of Goods Manufactured account. a. True b. False 25)When goods are transferred from the Finished Goods Inventory account to the Cost of Goods Sold account, the product costs move from the balance sheet to the income statement. a. True b. False 26)Manufacturing overhead costs allocated to a job amounted to $492,000. The actual manufacturing costs incurred during the year were $570,000. Overhead costs have been underallocated. a. True b. False 27)During the year, a company incurred $498,000 of manufacturing overhead costs and allocated $510,000 of manufacturing overhead costs. At the year-end, the adjustment entry needed to adjust the Manufacturing Overhead account balance to zero will include a debit to Cost of Goods Sold. a. True b. False 28)Dezire Travel Services provided the following information: Direct labor rate: $80 per hour Predetermined overhead allocation rate for indirect costs: $18 per direct labor hour If Dezire earns $1,600 for a job requiring 10 hours of direct labor, then Dezire will make a profit of $800. a. True b. False 29)Job order costing is well suited for the service industry. a. True b. False 30)A process costing system is most suitable for businesses that manufacture batches of unique products or provide specialized services. a. True b. False 31)A cellular phone manufacturer is more likely to use a process costing system rather than job order costing. a. True b. False 32)A process costing system is generally used by companies that produce homogeneous products. a. True b. False 33)Under process costing, the unit cost of the completed units is less than the unit cost of the incomplete units a. True b. False 34)At the end of an accounting period, the costs assigned to a production department can be split into the cost of units fully completed and transferred out, and the cost of units partially completed and remaining in the Work-in-Process Inventory of that department. a. True b. False 35)Conversion costs include the costs of purchasing and converting raw materials into finished products. a. True b. False 36)In a production cost report, the number of units to account for must always be greater than the number of units accounted for. a. True b. False 37)The task of summarizing the flow of physical units is one of the four steps involved in the preparation of the production cost report. a. True b. False 38)Cost amounts that are transferred out of one department become the transferred in cost for the next department. a. True b. False 39)When raw materials are purchased on account, the Accounts Payable account is credited. a. True b. False 40)Under process costing, depreciation on plant machinery is debited to the respective department's Work-in-Process Inventory. a. True b. False Multiple choice questions, worth 2pts each: To maximize your points please show ALL work 80 41) Which of the following is an objective of managerial accounting? A) to generate a company's financial statements for tax reporting B) to provide information to business managers to assist them in controlling their business C) to provide information to shareholders to assist them with their investment decisions D) to ensure that the reports produced for internal and external business purposes are GAAP compliant 42) Which of the following statements is true of financial accounting? A) It provides information to investors needed for their investment decisions. B) It provides forward-looking information needed for managing and delegating operations. C) It focuses on detailed reports for parts of the company rather than the whole company. D) It focuses on planning and controlling day-to-day operations. 43) Which of the following is the primary focus of financial accounting? A) providing information that managers need to make operational decisions B) providing summarized information on operational results to investors and creditors C) providing budgets for future periods D) providing highly detailed information on product lines, regions, and divisions 44) How is the management of a company accountable to its employees? A) The management must provide products that are safe and free of defects. B) The management must provide a safe workplace. C) The management must ensure that it earns a net positive return on its investments. D) The management must ensure the business is environmentally responsible to its community. 45) ________ is a philosophy of continuous improvement of products and processes. A) Just-in-Time (JIT) Management B) Enterprise Resource Planning (ERP) C) Supply Chain Management (SCM) D) Total Quality Management (TQM) 46) Which of the following correctly describes Just-in-Time (JIT) Management? A) It is a production approach that maintains surplus goods at each stage of manufacture. B) It is an inventory purchase approach that seeks purchase discounts on buying large quantities. C) It is a cost management approach that focuses on maintaining lean inventory levels. D) It is an inventory approach that stockpiles raw materials to protect against supply interruptions. 47) The income statement of a service company will most likely include ________. A) salaries expense B) factory overhead C) cost of goods sold D) direct materials 48) Product costs are expensed ________. A) when the products are consumed or sold B) when the accounting period they are incurred in comes to an end C) when the products are transferred to the Work-in-Process Inventory account D) when the market value of products goes above the recorded value 49) Goods that have been started in the manufacturing process but are not yet complete are included in the ________. A) Finished Goods Inventory account B) Work-in-Process Inventory account C) Raw Materials Inventory account D) Cost of Goods Sold account 50) The Work-in-Process Inventory account includes the ________. A) goods that are ready to be sold B) goods that are partially completed C) goods that have been sold in the market D) goods that are damaged during production 51) Which of the following is an example of a period cost for a manufacturing company? A) advertising expense B) depreciation on factory equipment C) indirect materials D) property taxes for the factory 52) Which of the following will be included in manufacturing overhead costs? A) indirect labor and indirect materials used B) salaries of salesmen C) direct materials and direct labor D) delivery costs to ship goods to customers 53) South State, Inc. used $153,000 of direct materials and incurred $63,000 of direct labor costs during the year. Indirect labor amounted to $270,000, while indirect materials used totaled $53,000. Other operating costs pertaining to the factory included utilities of $135,500; maintenance of $70,260; repairs of $53,400; depreciation of $133,000; and property taxes of $74,640. There was no beginning or ending finished goods inventory, but Work-in-Process inventory began the year with a $5,000 balance and ended the year with a $7,400 balance. How much is the cost of goods manufactured? A) $12,400 B) $1,003,400 C) $1,010,800 D) $1,005,800 54) Cost accounting systems are used ________. A) to accumulate product cost information B) to accumulate and assign period costs to products C) by manufacturing companies, not service companies D) by stockholders for decision-making purposes 55) Which of the following statements is true of costing systems? A) A process costing system would be used by manufacturers of custom-made perfumes. B) A job order costing system would be used by manufacturers of baking utensils. C) A construction company would likely use a process costing system. D) An accounting firm would likely use a job order costing system. 56) Which of the following is the correct order of the four steps of tracking product costs? A) assign accumulate allocate adjust B) accumulate assign allocate adjust C) adjust allocate accumulate assign D) allocate adjust accumulate assign 57) The entry to record the purchase of direct materials on account would include a ________. A) debit to the Raw Materials Inventory account B) debit to the Work-in-Process Inventory account C) credit to the Work-in-Process Inventory account D) credit to the Raw Materials Inventory account 58) The journal entry to record direct labor costs actually incurred involves a debit to the ________. A) Work-in-Process Inventory account B) Wages Payable account C) Manufacturing Overhead account D) Raw Materials Inventory account 59) The journal entry to record indirect labor costs incurred involves a debit to the ________. A) Manufacturing Overhead account B) Wages Payable account C) Finished Goods Inventory account D) Work-in-Process Inventory account 60) The journal entry to record $1,600 of direct labor and $200 of indirect labor incurred will include debit(s) to the ________. A) Manufacturing Overhead account for $1,800 B) Work-in-Process Inventory account for $1,600 and Finished Goods Inventory account for $200 C) Finished Goods Inventory account for $1,800 D) Work-in-Process Inventory account for $1,600 and Manufacturing Overhead account for $200 61) Which of the following will be categorized as a manufacturing overhead cost? A) depreciation on factory plant and equipment B) wages paid to assembly line workers C) administration charges of showroom D) cost of direct materials used 62) Which of the following correctly describes the term cost driver? A) the inflation rate that causes costs to rise B) the average inventory costs incurred at any point of time C) the primary factor that causes a cost to be incurred D) the total material, labor, and overhead costs of a completed job 63) Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours. At the beginning of the year, it estimated total manufacturing overhead costs to be $1,050,000, total number of direct labor hours to be 4,000, and total number of machine hours to be 20,000 hours. What was the predetermined overhead allocation rate? (Round your answer to the nearest cent.) A) $262.50 per machine hour B) $43.75 per direct labor hour C) $52.50 per machine hour D) $65.63 per direct labor hour 64) Archangel Manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on a percentage of direct labor costs. The production details for the year are given below: Total manufacturing overhead costs estimated at the beginning of the year Total direct labor costs estimated at the beginning of the year Total direct labor hours estimated at the beginning of the year Actual manufacturing overhead costs for the year Actual direct labor costs for the year Actual direct labor hours for the year $140,000 $330,000 11,000 direct labor hours $150,000 $360,000 11,600 direct labor hours Calculate the manufacturing overhead allocation rate for the year based on the above data. (Round your final answer to two decimal places.) A) 42.42% B) 257.14% C) 235.71% D) 1,206.90% 65) Gardner Machine Shop estimates manufacturing overhead costs for the coming year at $318,000. The manufacturing overhead costs will be allocated based on direct labor hours. Gardner estimates 5,000 direct labor hours for the coming year. In January, Gardner completed Job A33, which used 70 machine hours and 23 direct labor hours. What was the amount of manufacturing overhead allocated to Job A33? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) A) $1,463 B) $4,452 C) $5,915 D) $4,543 66) At the end of the year, Beta, Inc. has an unadjusted debit balance in the Manufacturing Overhead account of $4,000. The adjusting journal entry needed to adjust the balance to zero will include a ________. A) debit to Cost of Goods Sold $4,000 and credit to Manufacturing Overhead $4,000 B) debit to Manufacturing Overhead $4,000 and credit to Cost of Goods Sold $4,000 C) debit to Work-in-Process Inventory $4,000 and credit to Manufacturing Overhead $4,000 D) debit to Gross Profit $4,000 and credit to Cost of Goods Sold $4,000 67) Companies that manufacture identical items through a series of uniform production steps use ________ to determine cost per unit sold. A) a process costing system B) a job order costing system C) the weighted-average method D) the first-in, first-out method 68) Which of the following businesses is most likely to use a process costing system? A) an accounting firm B) a law firm C) a soda manufacturer D) a construction company 69) Gizmo Manufacturer, a widgets manufacturing company, divides its production operations into three processesDepartment 1, Department 2, and Department 3. The company uses a process costing system. Gizmo incurred the following costs during the year to produce 4,200 units: Department 1 Department 2 Department 3 $18,000 9,000 8,000 If Gizmo could sell only 3,600 units in during the year, what will be the cost per unit of widget produced? (Round your answer to the nearest cent.) A) $6.43 B) $4.29 C) $9.72 D) $8.33 Hint: Total costs / number of units produced = cost per unit 70) In a process costing system, production costs are ________. A) adjusted and allocated by jobs B) not inventoried C) directly shown on the income statement D) accumulated by process 71) Under process costing, the total production costs incurred in each process must be split between the units that have been completed in that process and transferred to the next process and the ________. A) Finished Goods Inventory if it is the first process B) units not completed and remaining in Work-in-Process Inventory for that department C) Cost of Goods Sold when the units are sold D) Work-in-Process Inventory of the previous department when there are no sales 72) Which of the following best describes the term equivalent units? A) partially completed units expressed in terms of fully completed units B) partially completed units of output that will be sold as is C) substitute of units that are partially completed D) different types of units that have same selling price 73) If 34,000 units are 80% complete with respect to direct materials, then the equivalent units of production for direct materials are ________. A) 34,000 units B) 27,200 units C) 6,800 units D) 40,800 units 74) The costs that were incurred in a previous process and brought into a later process as part of the product's cost are called ________ costs. A) transferred in B) transferred out C) accounted for D) to account for 75) The Assembly Department of Fallon, Inc., manufacturer of computers, had 4,500 units of beginning inventory in September, and 8,000 units were transferred to it from the Production Department. The Assembly Department completed 4,000 units during the month and transferred them to the Packaging Department. Calculate the total number of units to account for by the Assembly Department. A) 3,500 units B) 8,000 units C) 4,500 units D) 12,500 units Hint: To account for = Beginning balance + Amount transferred in 76) Costs assigned to goods sold are transferred to the Cost of Goods Sold account from the ________. A) Finished Goods Inventory account B) Work-in-Process Inventory account C) Raw Materials Inventory account D) Sales Revenue account 77) Delaware, Inc. purchased raw materials worth $800 for cash. The journal entry to record this transaction will include ________. A) a debit to Cash for $800 and a credit to Raw Materials Inventory for $800 B) a debit to Accounts Payable for $800 and a credit to Raw Materials Inventory for $800 C) a debit to Raw Materials Inventory for $800 and a credit to Accounts Payable for $800 D) a debit to Raw Materials Inventory for $800 and a credit to Cash for $800 78) A production cost report aids in preparing an income statement by providing data for ________. A) period costs incurred during the period B) various inventory accounts C) cost of goods sold during the period D) revenues generated during the period 79) Which of the following is not a way in which managers use the production cost reports to make decisions for their companies? A) evaluating performance B) identifying the most profitable products C) controlling period costs D) preparing the financial statements 80) Under the first-in, first-out (FIFO) method, the cost of equivalent units of production is calculated by ________. A) summing up only the transferred in costs of each department B) combining beginning inventory costs with current period costs C) considering only the transferred out costs of each department D) accounting for beginning inventory costs separately from current period costs Essay Problems: Worth 10 pts each. (Please complete all problems to maximize your points and show all work) I have provided multiple hints for you to help with the process. 40 81) Mason Cabinet Company sells standard kitchen cabinets. The following information summarizes Mason's operating activities for the year: Selling and Administrative Expenses $42,750 Purchases Sales Revenue Merchandise Inventory, January 1 Merchandise Inventory, December 31 85,7 00 154,5 00 12,5 00 16,2 00 Mason sold 950 cabinets during the year. Calculate the operating income for the year. Compute the unit cost for one cabinet (Round to two decimal places.) Answer: Operating income for the year Mason Cabinet Company Income Statement Year Ended December 31, 2015 Sales Revenue ________ Cost of Goods Sold: Beginning Merchandise Inventory ________ Purchases ________ Cost of Goods Available for Sale _______ Ending Merchandise Inventory (______) Cost of Goods Sold ________ Gross Profit ________ Selling and Administrative Expenses Operating Income ________ ___________ HINT: Unit cost for one cabinet = Cost of goods gold / Total units sold 82) Dreams Manufacturing, Inc. provided the following information for the year: PurchasesRaw Materials $270,000 Plant Utilities and Insurance Indirect Materials Indirect Labor 202,500 35,250 14,250 Ending BalanceWork-in-Process Inventory Ending BalanceRaw Materials Inventory Direct Labor 42,000 45,000 352,500 Depreciation on Factory Plant and Equipment 18,000 Beginning BalanceWork-in-Process Inventory 18,000 Beginning BalanceRaw Materials Inventory 63,000 Required: Prepare a statement of the cost of goods manufactured using the following format: Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory Direct Materials Used: Beginning Raw Materials Inventory Purchases of Raw Materials Raw Materials Available for Use Ending Raw Materials Inventory Direct Materials Used Direct Labor Manufacturing Overhead: Indirect Materials Indirect Labor DepreciationPlant and Equip. Plant Utilities and Insurance Total Manufacturing Overhead Total Manufacturing Costs Incurred During the Year Total Manufacturing Costs to Account For Ending Work-in-Process Inventory Cost of Goods Manufactured 83) For each of the following types of business, indicate why the manager needs to know the unit cost information. Managers of a Need to know the cost to Bakery Computer manufacturer Bank Seamstress 84) Journalize the following transactions for Malone Custom Furniture Manufacturing: a. Incurred and paid advertising expenses, $3,500. b. Incurred manufacturing wages of $30,000, 60% of which was direct labor and 40% of which was indirect labor. c. Purchased raw materials on account, $27,000. d. Used in production: direct materials, $12,000; indirect materials,$5,500 e. Recorded manufacturing overhead: depreciation on plant, $14,000; plant insurance (previously paid), $1,800; plant property tax, $4,500 (credit Property Tax Payable). f. Allocated manufacturing overhead to jobs, 150% of direct labor costs. g. Completed production on jobs with costs of $55,000. h. Sold inventory on account, $64,000; cost of goods sold, $35,000. i. Adjusted for overallocated or underallocated overhead. Answer: Item a. Accounts and Explanation Advertising Expenses Cash b. Work-in-Process Inventory Manufacturing Overhead Wages Payable c. Raw Materials Inventory Accounts Payable d. Work-in-Process Inventory Manufacturing Overhead Raw Materials Inventory e. Manufacturing Overhead Accumulated DepreciationPlant Manufacturing Overhead Prepaid Insurance Manufacturing Overhead Property Tax Payable f. Work-in-Process Inventory Manufacturing Overhead g. Finished Goods Inventory Work-in-Process Inventory h. Accounts Receivable Sales Revenue Cost of Goods Sold Finished Goods Inventory i. Cost of Goods Sold Manufacturing Overhead Debit Credit 85) Ten Hills Manufacturing has two processing departments, Department I and Department II. During the year, direct materials were assigned to the two production departments: $280,000 to Department I and $300,000 to Department II. During the period, $8,000 of indirect materials were used in production. Provide the journal entry to record this transaction. Answer: Work-in-Process InventoryDepartment I Work-in-Process InventoryDepartment II Manufacturing Overhead Raw Materials Inventory Materials used, direct materials assigned to WIP, indirect materials accumulated in MOH E17-17 Accounting for job costs Learning Objective 2 c. COGS $16,800 Spring Trailers' job cost records yielded the following information: Job Date Total Cost of Job at July 31 No. Started Finished Sold 1 June 21 July 16 July 17 $ 3,000 2 June 29 July 21 July 26 13,800 3 July 3 August 11 August 13 6,700 4 July 7 July 29 August 1 4,800 Use the dates in the table to identify the status of each job. Compute the following balances for Spring: a. Work-in-Process Inventory at July 31 b. Finished Goods Inventory at July 31 c. Cost of Goods Sold for July E17-18 Recording materials and labor costs Learning Objective 2 Azalea Company makes artificial flowers and reports the following data for the month: Purchases of materials, on account Materials requisitions: $ 52,000 Direct materials 47,800 Indirect materials 600 Labor incurred (not yet paid): Direct labor 26,400 Indirect labor 1,830 Journalize the entries relating to materials and labor. E17-21 Allocating and adjusting manufacturing overhead Learning Objectives 3, 5 2. Underallocated by $15,500 The manufacturing records for Bob's Boats at the end of the 2016 fiscal year show the following information about manufacturing overhead: Overhead allocated to production $ 409,500 Actual manufacturing overhead costs 425,000 Predetermined overhead allocation rate 45 per machine hour Requirements 1. How many machine hours did Bob's Boats use in 2016? 2. Was manufacturing overhead overallocated or underallocated for the year, and by how much? 3. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. E17-26 Determining missing amounts Learning Objectives 2, 3, 4, 5 Analyze the following Taccounts, and determine the missing amounts. E17-26 Determining missing amounts Learning Objectives 2, 3, 4, 5 Analyze the following Taccounts, and determine the missing amounts. E18-24 Computing EUP, first and second departments Learning Objectives 2, 3 2. EUP for DM 85,000 ................... Selected production and cost data of Sharon's Color Co. follow for May 2016: Mixing Department Heating Dep Beginning work-in-process, April 30 40,000 8,000 Started in May 55,000 Units to account for: Transferred in during May Total units to account for 80,000 95,000 88,000 Mixing Department Heating Dep Completed and transferred out during May 80,000 76,000 Ending work-in-process, May 31 15,000 12,000 Total units accounted for 95,000 88,000 Units accounted for: On May 31, the Mixing Department ending WorkinProcess Inventory was 65% complete for materials and 25% complete for conversion costs. The Heating Department ending WorkinProcess Inventory was 75% complete for materials and 60% complete for conversion costs. Requirements 1. Compute the equivalent units of production for direct materials and for conversion costs for the Mixing Department. 2. Compute the equivalent units of production for transferred in costs, direct materials, and conversion costs for the Heating Department. E18-27 Preparing journal entriesoutputs Learning Objective 4 Galvan Company has a production process that involves three processes. Units move through the processes in this order: cutting, stamping, and then polishing. The company had the following transactions in November: Cost of units completed in the Cutting Department, $19,000 Cost of units completed in the Stamping Department, $23,000 Cost of units completed in the Polishing Department, $39,000 Sales on account, $20,000 Cost of goods sold is 40% of sales Prepare the journal entries for Galvan Company. FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E18-24 Requirements 1. Compute the equivalent units of production for direct materials and for conversion costs for the Mixing Department. 2. Compute the equivalent units of production for transferred in costs, direct materials, and conversion costs for the Heating Department. Solution: Requirement 1 Mixing Department Completed Units: xx units x 100% In process units: xx units x 65% Total EUP for direct materials: = = = xx xx $89,750 Completed Units: xx units x 100% In Process units: xx units x 25% Total EUP for conversion costs: = = = xx xx $83,750 completed units: xx units x 100% In process units: xx units x 100% Total EUP for transferred in = = = xx xx $88,000 Completed units: xx units x 100% In process units: xx units x 75% Total EUP for direct materials: = = = xx xx $85,000 Completed units: xx units x 100% In process units: xx units x 60% Total EUP for conversion costs: = = = xx xx $83,200 Requirement 2 Heating Department Chapter 18: Process Costing Page 1 of 3 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition nd for conversion ts, direct materials, Chapter 18: Process Costing Page 2 of 3 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E18-27 Prepare the journal entries for Galvan Company. Solution: Date Nov. 30 Accounts and Explanation Work-in-process inventory - Stamping Work-in-process inventory - cutting Transfer costs assigned to units transferred Debit xx Work-in-process inventory - polishing work-in-process inventory - stamping transfer costs assigned to units transferred xx Finished goods inventory work-in-process inventory - polishing transfer costs assigned to finished goods xx Accounts Receivable Sales Record sales for the month xx Cost of Good Sold (xx * 40%) Finished goods inventory Units sold, costs assigned to COGS xx Chapter 18: Process Costing Credit xx xx xx xx xx Page 3 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 TRUE FALSE FALSE TRUE TRUE TRUE FALSE TRUE FALSE FALSE FALSE TRUE FALSE TRUE FALSE TRUE TRUE FALSE TRUE FALSE TRUE FALSE TRUE FALSE TRUE TRUE FALSE FALSE TRUE FALSE TRUE TRUE FALSE TRUE TRUE FALSE TRUE 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 TRUE TRUE FALSE B A B B D C A A B B A A B C D B A A A D A C B A A A A C D D B A B A 75 76 77 78 79 80 D A D C C D 81) Mason Cabinet Company Income Statement Year Ended December 31, 2015 Sales Revenue 154500 Cost of Goods Sold: Beginning Merchandise Inventory Purchases Cost of Goods Available for Sale Ending Merchandise Inventory Cost of Goods Sold Gross Profit Selling and Administrative Expenses Operating Income 12500 85700 98200 -16200 82000 82000 72500 42750 29750 HINT: Unit cost for one cabinet = Cost of goods gold / Total units sold 82) Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory $18,000 Direct Materials Used Beginning Raw Materials Inventory Purchases of Raw Materials Raw Materials Available for Use Ending Raw Materials Inventory $63,000 $270,00 0 $333,00 0 -$45,000 Direct Materials Used $288,000 Direct Labor $352,500 Manufacturing Overhead Indirect Materials $35,250 Indirect Labor $14,250 Depreciation on Factory Plant and Equipment $18,000 $202,50 0 Plant Utilities and Insurance Total Manufacturing Overhead $270,000 Total Manufacturing Costs Incurred during the Year $910,500 Total Manufacturing Costs to Account For $928,500 Ending Work-in-Process Inventory -$42,000 Cost of Goods Manufactured $886,500 83) Managers of a Bakery Need to know the cost to 1) Fix the Selling Price for desired Profit Computer manufacturer Bank 2) Calculate the Break Even Point 3) Control and Improve the cost of Production 4) Take Decisions like -Identify the most profitable product, Evaluating Performance 5) Prepare Financial Statement 1) Price and Configuration of Computer changes very fast and also varies a lot. Unit cost information is required to control and maximize profit, by selling the computer with additional features. 2) Unit Cost Report also help managers to decide, production of which model to be stopped, which model can be upgraded & sold in market on profit. 1) Unit cost Report help bank mangers in lending money to varies companies 2) To Make provisions for non-performing assets & to recover nonperforming assets 3) To check the inventory level of the company seeking loan 1) To Calculate the different stitching Charges for different dresses Seamstress 2) Control and Improve the cost of Production and Maximize the Profit 3) Control the Inventory of Supplies. 84) Answer: Item Accounts and Explanation a. Advertising Expenses Cash Debit Credit 3500 3500 b. Work-in-Process Inventory Manufacturing Overhead Wages Payable 18000 12000 Raw Materials Inventory Accounts Payable 27000 Work-in-Process Inventory Manufacturing Overhead Raw Materials Inventory 12000 5500 c. d. 30000 27000 17500 e. f. g. h. i. Manufacturing Overhead Accumulated DepreciationPlant 14000 14000 Manufacturing Overhead Prepaid Insurance 1800 Manufacturing Overhead Property Tax Payable 4500 1800 4500 Work-in-Process Inventory Manufacturing Overhead (18000 x 150%) 27000 Finished Goods Inventory Work-in-Process Inventory 55000 Accounts Receivable Sales Revenue 64000 Cost of Goods Sold Finished Goods Inventory 35000 Cost of Goods Sold Manufacturing Overhead 10800 27000 55000 64000 35000 10800 85) Answer: Work-in-Process InventoryDepartment I Work-in-Process InventoryDepartment II Manufacturing Overhead Raw Materials Inventory Materials used, direct materials assigned to WIP, indirect materials accumulated in MOH Explanation for True-False & MCQ: 28) Explanation: 280000 300000 8000 588000 Revenue Less costs: Direct labor Indirect labor 1600 800 180 980 Profit 980 620 53) Explanation: Beginning Work-in-Process Inventory Direct Materials Used Direct Labor Manufacturing Overhead (270000+53000+135500+70260+53400+133000+74 640) 5000 15300 0 63000 78980 0 100580 0 101080 0 -7400 100340 0 Total Manufacturing Costs Incurred during the Year Total Manufacturing Costs to Account For Ending Work-in-Process Inventory Cost of Goods Manufactured 63) Estimated manufacturing overhead costs for the year (A) Estimated total number of machine hours (B) Predetermined overhead allocation rate per machine hour (A / B) $1,050,000 24,000 $43.75 64) Estimated total manufacturing overhead costs at the beginning of the year (A) Estimated total direct labor cost at the beginning of the year (B) Manufacturing overhead allocation rate (A / B) 140000 330000 42.42% 65) Estimated manufacturing overhead costs for the year (A) Estimated direct labor hours (B) Estimated manufacturing overhead rate per direct labor hour (C = A / B) 318000 5,000 63.60 Direct labor hours used by Job A33 (D) Manufacturing overhead allocated to Job A33 (C x D) 23 1463 69) Cost per unit of Widget Produced Total Cost (18000+9000+8000) (A) Number of Units Produced (B) Cost per unit of Widget Produced (A / B) 73) 34000 x 80% = 27200 75) 4500 + 8000 = 12500 Total Cost Number of Units Produced 35000 4200 8.33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 TRUE FALSE FALSE TRUE TRUE TRUE FALSE TRUE FALSE FALSE FALSE TRUE FALSE TRUE FALSE TRUE TRUE FALSE TRUE FALSE TRUE FALSE TRUE FALSE TRUE TRUE FALSE FALSE TRUE FALSE TRUE TRUE FALSE TRUE TRUE FALSE TRUE 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 TRUE TRUE FALSE B A B B D C A A B B A A B C D B A A A D A C B A A A A C D D B A B A 75 76 77 78 79 80 D A D C C D 81) Mason Cabinet Company Income Statement Year Ended December 31, 2015 Sales Revenue 154500 Cost of Goods Sold: Beginning Merchandise Inventory Purchases Cost of Goods Available for Sale Ending Merchandise Inventory Cost of Goods Sold Gross Profit Selling and Administrative Expenses Operating Income 12500 85700 98200 -16200 82000 82000 72500 42750 29750 HINT: Unit cost for one cabinet = Cost of goods gold / Total units sold 82) Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory $18,000 Direct Materials Used Beginning Raw Materials Inventory Purchases of Raw Materials Raw Materials Available for Use Ending Raw Materials Inventory $63,000 $270,00 0 $333,00 0 -$45,000 Direct Materials Used $288,000 Direct Labor $352,500 Manufacturing Overhead Indirect Materials $35,250 Indirect Labor $14,250 Depreciation on Factory Plant and Equipment $18,000 $202,50 0 Plant Utilities and Insurance Total Manufacturing Overhead $270,000 Total Manufacturing Costs Incurred during the Year $910,500 Total Manufacturing Costs to Account For $928,500 Ending Work-in-Process Inventory -$42,000 Cost of Goods Manufactured $886,500 83) Managers of a Bakery Need to know the cost to 1) Fix the Selling Price for desired Profit Computer manufacturer Bank 2) Calculate the Break Even Point 3) Control and Improve the cost of Production 4) Take Decisions like -Identify the most profitable product, Evaluating Performance 5) Prepare Financial Statement 1) Price and Configuration of Computer changes very fast and also varies a lot. Unit cost information is required to control and maximize profit, by selling the computer with additional features. 2) Unit Cost Report also help managers to decide, production of which model to be stopped, which model can be upgraded & sold in market on profit. 1) Unit cost Report help bank mangers in lending money to varies companies 2) To Make provisions for non-performing assets & to recover nonperforming assets 3) To check the inventory level of the company seeking loan 1) To Calculate the different stitching Charges for different dresses Seamstress 2) Control and Improve the cost of Production and Maximize the Profit 3) Control the Inventory of Supplies. 84) Answer: Item Accounts and Explanation a. Advertising Expenses Cash Debit Credit 3500 3500 b. Work-in-Process Inventory Manufacturing Overhead Wages Payable 18000 12000 Raw Materials Inventory Accounts Payable 27000 Work-in-Process Inventory Manufacturing Overhead Raw Materials Inventory 12000 5500 c. d. 30000 27000 17500 e. f. g. h. i. Manufacturing Overhead Accumulated DepreciationPlant 14000 14000 Manufacturing Overhead Prepaid Insurance 1800 Manufacturing Overhead Property Tax Payable 4500 1800 4500 Work-in-Process Inventory Manufacturing Overhead (18000 x 150%) 27000 Finished Goods Inventory Work-in-Process Inventory 55000 Accounts Receivable Sales Revenue 64000 Cost of Goods Sold Finished Goods Inventory 35000 Cost of Goods Sold Manufacturing Overhead 10800 27000 55000 64000 35000 10800 85) Answer: Work-in-Process InventoryDepartment I Work-in-Process InventoryDepartment II Manufacturing Overhead Raw Materials Inventory Materials used, direct materials assigned to WIP, indirect materials accumulated in MOH Explanation for True-False & MCQ: 28) Explanation: 280000 300000 8000 588000 Revenue Less costs: Direct labor Indirect labor 1600 800 180 980 Profit 980 620 53) Explanation: Beginning Work-in-Process Inventory Direct Materials Used Direct Labor Manufacturing Overhead (270000+53000+135500+70260+53400+133000+74 640) 5000 15300 0 63000 78980 0 100580 0 101080 0 -7400 100340 0 Total Manufacturing Costs Incurred during the Year Total Manufacturing Costs to Account For Ending Work-in-Process Inventory Cost of Goods Manufactured 63) Estimated manufacturing overhead costs for the year (A) Estimated total number of machine hours (B) Predetermined overhead allocation rate per machine hour (A / B) $1,050,000 24,000 $43.75 64) Estimated total manufacturing overhead costs at the beginning of the year (A) Estimated total direct labor cost at the beginning of the year (B) Manufacturing overhead allocation rate (A / B) 140000 330000 42.42% 65) Estimated manufacturing overhead costs for the year (A) Estimated direct labor hours (B) Estimated manufacturing overhead rate per direct labor hour (C = A / B) 318000 5,000 63.60 Direct labor hours used by Job A33 (D) Manufacturing overhead allocated to Job A33 (C x D) 23 1463 69) Cost per unit of Widget Produced Total Cost (18000+9000+8000) (A) Number of Units Produced (B) Cost per unit of Widget Produced (A / B) 73) 34000 x 80% = 27200 75) 4500 + 8000 = 12500 Total Cost Number of Units Produced 35000 4200 8.33