P4-17R Review Problem for Chapters 1-4 Chrome-It, Inc., manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, stamping and plating, and two service departments, power and maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: Chrome-It, Inc. Post-Closing Trial Balance September 30, 2011 Cash Accounts Receivable Finished Goods Work in Process Materials Prepaid Insurance Factory Building Accum. Depr.-Factory Building Machinery and Equipment Accum. Depr.- Machinery and Equipment Office Equipment ... Accum. Depr.-Office Equipment Accounts Payable FICA Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Employees Income Tax Payable Capital Stock Retained Earnings Materials Chapter 4 - Accounting for Factory Overhead A B C Factory Supplies $ 22,500 21,700 8,750 3,600 15,000 4,320 64,000 38,000 10,500 $188,370 Additional information: 1. The balance of the materials account represents the following: Units Unit Cost 120 320 180 $ 22,500 $25 15 30 16,000 7,500 2,500 3,120 364 1,404 5,200 75,000 54,782 $188,370 Total $ 3,000 4,800 5,400 1,800 $15,000 The company uses the FIFO method of accounting for all inventories. Material A is used in the stamping department, and materials B and C are used in the plating department. 231 234 Principles of Cost Accounting LO6 j. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month. k. During the month, Jobs 803 and 905 were sold at a markup of 50% on cost. 150.). I. Received $55,500 from customers in payment of their accounts. m. Checks were issued in the amount of $43,706 for payment of the payroll. Required: 1. Set up the beginning trial balance in T-accounts. 2. Prepare materials inventory ledger cards and enter October 1 balances. 4. 3. Set up job cost sheets as needed. 4. Record all transactions and related entries for the month of October and post to T-accounts. -5 5. Prepare a service department expense distribution work sheet for October. 6 6. At the end of the month: b. a. Analyze the balance in the materials account, the work in process account, and the finished goods account. 7. A Prepare the statement of cost of goods manufactured, income statement, and balance sheet for October 31. 7.B Income + B/s 109. MINI-CASE Activity-based Costing Home Entertainment, Inc., manufactures two types of DVD players: stan- dard and deluxe. It attempts to set selling prices based on a 50% markup on manufacturing costs to cover selling and administrative expenses and to earn an acceptable return for shareholders. Tom Sales, Vice President- Marketing, is confused because the numbers provided by Anne Cash, Controller, indicate that standard DVD players should be priced at $150 per unit and deluxe DVD players at $300 per unit. The competition is selling comparable models for $145 and $525, respectively. Sales informs Cash that there must be something wrong with the job costing system. He had recently attended a seminar where the speaker stated that "All production costs are not a function of how many units are produced, or of how many labor hours, labor dollars, or machine hours are expended." He knows that the company uses direct labor dollars as its only cost allocation base. Tom thinks that perhaps this explains why the product costs and, therefore selling prices, are so different from those of the competitors. Currently, the costs per unit are determined as follows: Direct materials Direct labor Factory overhead (300% of direct labor $). Manufacturing cost per unit Standard $ 30.00 17.50 52.50 $100.00 Deluxe $ 50.00 37.50 112.50 $200.00