P2-2. Economic Order Quantity: Ordering and Carrying Costs LO1 All Similar to Self-Study Problem 1 Mayer, Inc. predicts it will use 63,000 units of material during the year. The expected daily usage is 500 units, and there is an expected lead time of five days and a desired safety stock of 1,500 units. The material is expected to cost $5 per unit. Mayer anticipates it will cost $194 45 to place each order. The annual carrying cost is 5.50 per unit REQUIRED: 1. Compute the order point. 2. Determine the most economical order quantity by use of the EOQ formula fround to the nearest whole unit). a Calculato the total cost of ordering and carrying at the EOQ point P2-3. Economic Order Quantity; Tabular Computation LO1 Lopez Chemical Inc. requires 20,000 gallons of material annually, the cost of placing an order is $20, the annual carrying cost per gallon is 55. REQUIRED Determine the EOQ from potential order sizes of 300, 400, 500, 600, 700, and 800 gallons by constructing a table similar to the one appearing in Controlling the Investment in Materials on pages 73-74 P24. Economic Order Quantity Safety Stock LO1 IP2-2.me that the company way to go Chical Thing Problem REQUIRED Compute the average number of gallons in inventory 2. Con the total carry cost Compute the total onder cont. Didater from your wer in P2-37 Why? P2-5. Inventory Costing Methods LOS * The purchases and issues of rubber paket (Material: Ledger 11216) as shown in the records of Hidal Corp. Tor November follow UM Ed. NS2 0200 . 30.000 5 30 . . The 114 3. REOLED - Complete a material ledger account sanitar to Figure 2-10 (the "On Order collars should be omitted) for each of the following inventory couting methods, using a perpetual inventory system a FIFO LIFO Weighted average carrying unt prices to five decimal places) 2. For each method, prepare a schedule that shows the total cost of materials transferred to Work in Process and the cost of the anding inventory Critical Thinking Probilom pre continue to now, would you for peng FIFO method? Explain 4 When prin continue to what is the effect of FIFO LIFO on the vertory balance for material reported in the balance sheet Discuss 9 P2-6. Inventory Costing Methods LOS X The following transactions affecting materials occurred in February 1 REQUIRED Record the transactions in material ledger accounts ar to Figure 2-10. (The On Ondercou should be omitted) the following inventory methods, assuming the use of a perpetual inventory system. Carry unit prices to four decimal places 1 FIFO 2.LIFO 2. Weighted average P2-7. Journalizing Materials Transactions LO3 Terif's Transmissions uses a job order cost system. A partiest of the accounts being maintained by the company with their balances as of November 1. follows: 22 Pod The following transactions were completed during November Materials purchases on account during the month 574,000 b. Materials requisitioned during the month 1 Direct materials, 557,000. 2 Indirect materials, $11,000 Direct materials returned by factory to storoom during the month $1.100 Material umed to venders during the month prior to payment. $2.500 Payments to vendors turing the month, S.500 ROUBLED 1. Prepare general pourral entries for each of the transaction. 2. Post the general journal entries to encounts. 1 Balance the accounts and report the balances of November 30 for the following Cash Materiale e. Accounts Payable P2-8, Journalting Materials Transactions LOG Sydney Cycles Comp. res a job order costuyem. A partial at at the accounts being maintained ty the company, with the balances as of September 1, follows: Working JU The following transactions were completed during September a Materials purchases on account during the month $58,000 Materials requisitioned during the month 1. Direct materials, $45,000 2. Indirect materials, $8,000 a. Direct materials returned by factory to stornroom during the month $900. Materials returned to vendors during the month prior to payment. $1,500 Payments to vendors during the month $1,500 REQUIRED: 1. Prepare general journal entries for each of the transaction. 2 Post the general journal entries to T-accounts Accounts Payable P2-9. Analyzing Materials and Other Transactions LOS Tuscany Products, inc ter job order cost system. The following accounts have been taken from the books of the company Mile 2100 Nemo Bolo Work in Proces Matt D try Ove 17 ade Gods To Couro Coda od Baby Go The 7.50 REQUIRED 1. Analyze the accounts and describe in narative form what transaction took place (Use the reference leters throught in your explanations and note that some accounts needed in your explanation have been purposely amitted.) 2. Lut the supporting documents or forms required to record each transaction involving the receipt or issuance of materiais Determine the ending balances for Materials, Work in Process and Finished Goods P2-10. Comprehensive Analysis of Materials Accounting Procedures LOZ, LOS The following actions counted at Syracuse Sheet Metal Co, relative to accesunting for materials costs for April H H - H 44 med her The dotto The TE Theo 1 And REQUIRED What formen werd What journals, any, were made What books of origin any wore used to record the data? What subay records were affected? To solve through d, use a columnar fout with columns for Dune Form, Juma Entry Book of Original Entry, and Subsidiary Lodget-see Figure 2-13) 1. Cute and show your computations for the folowing The Materials inventory balance as of April 30 The cost of materials used in production during Art P2.11. JIT and Cost Control LO4 Langray. Lad produces 50.000 units each day, and the average number of units in work in process is 200.000 The average annual Inventory crying costs 25% of inventory cost and the cost of the average work in process is $1,000,000 REQUIRED Delumine the throughout time 2. Compute the carrying costs. 3 the same day output can be achieved while reducing the work in process by 50%, determine the new throughout me Critical Thinking Problem What has happened to the velocity of production is part 37 Compute the annual carrying costs for part 3 What was the impact of the action in part 3 on the carrying costs? P2-12. Backflush Costing LO4 Similar to Self-Study Problem 2 Russell Com us backflush costato account for its manufacturing costs. The tracer Bons for corino inventory tractions REQUIRED 1. Prepare journal entro if needed to account for the following transactions Purchased raw materials on account, $150,000 Requisitioned raw materials to production, $150.000 Distributed direct labor costs $25.000 . Incurred manufacturing overhead conto, 5100,000. (Une Various Credits for the credit part of the entry) Cost of products completed, $275,000 Completed products sold for 400,000, on account 2. Prepare any ouma entries that would be different from the above, if the only trigger points were the purchase of materials and the sale of finished goods. P2-13. Backflush Costing LO4 Similar to Self-Study Problem Webster Company uses tackflush conting to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products REQUIRED 1. Prepare youmal entries, it needed to account for the following transactions a Purchased raw materials on account. $135,000 Requisitioned raw materials to production, $135,000 o Distributed direct labor costs, 520,000 Incurred manufacturing overhead costs $80,000. (Use Various Credits for the credit part of the entry) Cost of products completed, $225,000 Completed products sold for $355.000, on account 2. Prepare any journal entries that would be different from the above, the only trigger points were the purchase of materials and the sale of finished goods P2-14. Materials Inventory Shortage: Returns Scrap: Spoiled Goods LOJ, LOS An examination of Buckhorn Fabricators records reveals the following transactions: On me 31, prventory of water was gation the book quanteng word verge method, was 10.000 gW @ 5.52 per al t Production returned to the stroom materials that cost $775 Materials inloed at ST were charged to Factory Overhead (Repairs and Maintenance), but should have been charged to Won in Proces Defective material, purchased on account, was returned to the vendor. The material retumed crom 234, Goods sold to a customer, on nocount for $5,000 com 2,500) were reamed because of a misunderstanding of the my dered. The customer stated that the goods retumd were in excess of the quantity needed. Materials requisitioned totaled 522,300, of which $2,100 represented supplies used. . Materials purchased account totaled $25,500. Freight on the materials purchased was $185. Direct materials retumed to the noroom amounted to 5060 Scrap materials sent to the storeroom were valued at an estimated selling price of $685 and treated as a reduction in the cont of all jobs worked on during the period Spoiled work sert to the storeroom valued at a sales price of so had production costs of $200 already charged to. The cost of the spolage is to be charged to the specific job worked on during the period. The scrap material in were sold for $65 cash. REQUIRED Record the entries for each transaction P2-15. Spoiled Goods; Loss Charged to Factory Overhead Loss Charged to Job LOS One of the tennis rackets that Ace Sporting Goods manufactures is attanium model (Slam) that is for $149. The cost of each Slam consists of M Labor 15 Job 100 produced 100 Stars, of which six wore spoiled and classified as seconds. Seconds are sold to discount stores for $50 each REQUIRED: 1. Under the assumption that the loss from sportage will be distributed to all jobs produced during the current period, use general journal entries to (a) record the cost of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled unit 2 Under the assumption that the loss due to spolage will be charged to Job 100, se general journal entries to record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units LOS Lloyd Industrier manufactures clectrical equipment from specifications received from customers Job X10 was for 1.000 motors to be used in a specially designed electrical complex. The following costs were determined for each motor Labor They Al final inspection, Lloyd discovered that 33 motors did not meet the exacting specifications established by the customer. An camination indicated at 18 motors were beyond repair and should be sold as spoiled goods for 575each. The remaining 15 motors, though defective could be reconditioned as first quality units by the addition of S1,650 for materials, $1.500 for labor and $1.200 for factory overhead REQUIRED: Prepare the journal entries to record the following 1. The topping of the 18 motor, with the income from spoiled goods treated as a reduction in the manufacturing cost of the specific job. 2 The correction of the 15 defectivo motors, with the additiorul coat churged to the specific job. The additional cost of replacing the 18 spoiled motors with new motors Critical Thinking Problem The sale of the spoiled motors for $75 each 5. Il the reconditioned motors sell for 100 each, is Lloyd better off reconditioning the defective motors or selling them as is for $75 as spoiled goods? P2-17R. Review Problem for Chapter 1 and 2 Ultrat.in Corp, manufactures chain hoists. The raw materials inventories on hand on October 1 were as follows: 12.000 Puli. Blend 10.000.000 The balances in the ledger accounts on October 1 were as follows: Work in pro Mutta 5 12.000 5.00 51.000 Am 2. ET Transactions during October ware as follows: Payroll recorded during the month direct labor, $2.000 indirect labor, 54.00 Indirect materials purchased for cost $1.000 Materials purchased on account cha DOO 1. 55,800, puter-2,000, 510200 steel plate-5,000 units, $3,000 Sales on account for the month $126,375 Accounts receivable collected. $72.500 Materials used during October (FIFO posting chair-14.000 the pulleyn-4.00 sets; bolts and to 4,000 bruto pluton-3,800 unit Payroll paid $32.800 Indirect materials sued to production in Odober, 5650 Factory heat, light, and power cost for October, $9,000 (not yet paid). Office lories paid $6,000 Advertising paid $2.000, L Accounts payable paid $33.750. m Expired insurce-on office equipment, $100 on factory machinery, $300 n Factory rent paid, $2,000 o Depreciation on office equipment, 5400 on office furniture, $180, on machinery, 51,200 a Factory overhead charged to jobs. $11.950. a Work in Process, October 31, $31,000. (Mirat. The difference between the sum of the beginning balance in Work in Process plus the total charges to it during the period loss the ending balance in Work in Process represents the cost of the goods completed during the period.) Cost of goods sold during the month $84.250 REQUIRED: 1. Set up T-accounts and enter the balances as of October 1 2. Prepare journal entries to record each of the previous transactions maintained, however, show the calculation for the cost of materials used. 4. Prepare a statement of cont of goods manufactured for Octobet. 6. Prepare an income statement & Prepare a balance sheet showing the classifications of current assets, plant and equipment, current tables and stockholders equity