Question 2.1

The following costs are attributed to the Gandalf and Company:

Purchase of raw materials (all direct)	$291,100
Direct labour cost	141,800
Manufacturing overhead costs	198,100
Change in inventories:
Decrease in raw materials	$9,100
Decrease in work in process	4,100
Decrease in finished goods	13,200

Gandalf and Company used a 120% predetermined overhead rate based on direct labour cost.

Submission Instructions:

1. Calculate the cost of goods manufactured.
2. What was the cost of goods sold before adjusting for any under or over applied overhead?
3. By how much was manufacturing overhead cost under or over applied?
4. Prepare a summary journal entry to close any under or over applied manufacturing overhead cost to the cost of goods sold. Is such an entry appropriate in this situation? Why or why not?

Question 2.2

Paddle Place manufactures paddles and tables. In December, the two production departments had budgeted allocation bases of 3,100 machine-hours in Paddle and 6,900 direct manufacturing labor-hours in Table. The budgeted manufacturing overheads for the month were $51,200 and $56,900, respectively. For Project X, the actual costs incurred in the two departments were as follows:

	Paddle	Table
Direct materials purchased on account	$80,000	$177,500
Direct materials used	21,200	12,200
Direct manufacturing labor	41,900	53,500
Indirect manufacturing labor	8,900	9,000
Indirect materials used	5,100	4,750
Lease on equipment	14,100	3,750
Utilities	990	1,250

Project X incurred 900 machine-hours in Paddle and 200 manufacturing labor-hours in Table. The company uses a budgeted overhead rate for applying overhead to production.

Submission Instructions:

1. Determine the budgeted manufacturing overhead rate for each department.
2. Prepare the journal entries for Paddle department.
3. What is the total cost of Project X?

Question 2.3

Identify the following situations as "job-order costing" or "process costing"?

Situation	Job Order or Process Costing
An oil refinery
A soft-drink bottler
A film studio
A manufacturer of fine custom jewelry
A textbook publisher
A paint factory
A golf course designer
A public accounting firm
A pharmaceutical company
An advertising agency
A flour mill
A landscaping company
A catering service
A commercial aircraft manufacturer
A management consulting firm
An auto repair garage
An apparel manufacturer

Question 2.4

Hamilton Company recorded the following transactions for the just-completed month. Journalize these entries.

a. $45,000 in raw materials was purchased on account.

b. $125,000 in raw materials was requisitioned for use in production. Of this amount, $70,000

was for direct materials and the remainder was for indirect materials.

c. Total labour wages of $212,000 were incurred. Of this amount, $183,000 was for direct

labour and the remainder were for indirect labor.

d. Additional manufacturing overhead costs of $189,000 were incurred.

e. There was $400,000 of manufactured products completed by the end of the month