# Chapter 3 Systems Design: Job-Order Costing

Size: px
Start display at page:

Transcription

3 Exercise 3-1 (10 minutes) a. Job-order costing b. Job-order costing c. Process costing d. Job-order costing e. Process costing* f. Process costing* g. Job-order costing h. Job-order costing i. Job-order costing j. Job-order costing k. Process costing l. Process costing * Some of the listed companies might use either a process costing or a job-order costing system, depending on the nature of their operations and how homogeneous the final product is. For example, a plywood manufacturer might use job-order costing if it has a number of different plywood products that are constructed of different woods or come in markedly different sizes. Solutions Manual, Chapter 3 73

4 Exercise 3-2 (15 minutes) 1. The direct materials and direct labor costs listed in the exercise would have been recorded on four different documents: the materials requisition form for Job ES34, the time ticket for Harry Kerst, the time ticket for Mary Rosas, and the job cost sheet for Job ES The costs for Job ES34 would have been recorded as follows: Materials requisition form: Quantity Unit Cost Total Cost Blanks 40 \$8.00 \$320 Nibs 960 \$ \$896 Time ticket for Harry Kerst Started Ended Time Completed Rate Amount Job Number 9:00 AM 12:15 PM 3.25 \$12.00 \$39.00 ES34 Time ticket for Mary Rosas Started Ended Time Completed Rate Amount Job Number 2:15 PM 4:30 PM 2.25 \$14.00 \$31.50 ES34 Job Cost Sheet for Job ES34 Direct materials.. \$ Direct labor: Harry Kerst Mary Rosas \$ Managerial Accounting, 12th Edition

5 Exercise 3-3 (10 minutes) The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead... \$586,000 Estimated total direct labor hours (DLHs)... 40,000 DLHs = Predetermined overhead rate... \$14.65 per DLH Solutions Manual, Chapter 3 75

6 Exercise 3-4 (15 minutes) a. Raw Materials... 86,000 Accounts Payable... 86,000 b. Work in Process... 72,000 Manufacturing Overhead... 12,000 Raw Materials... 84,000 c. Work in Process ,000 Manufacturing Overhead... 3,000 Wages Payable ,000 d. Manufacturing Overhead ,000 Various Accounts , Managerial Accounting, 12th Edition

7 Exercise 3-5 (10 minutes) Actual direct labor-hours... 12,600 Predetermined overhead rate... \$23.10 = Manufacturing overhead applied... \$291,060 Solutions Manual, Chapter 3 77

8 Exercise 3-6 (15 minutes) 1. Actual manufacturing overhead costs... \$ 48,000 Manufacturing overhead applied: 10,000 MH \$5 per MH... 50,000 Overapplied overhead cost... \$ 2, Direct materials: Raw materials inventory, beginning... \$ 8,000 Add purchases of raw materials... 32,000 Raw materials available for use... 40,000 Deduct raw materials inventory, ending... 7,000 Raw materials used in production... \$ 33,000 Direct labor... 40,000 Manufacturing overhead cost applied to work in process... 50,000 Total manufacturing cost ,000 Add: Work in process, beginning... 6, ,000 Deduct: Work in process, ending... 7,500 Cost of goods manufactured... \$121, Managerial Accounting, 12th Edition

9 Exercise 3-7 (20 minutes) Parts 1 and 2. Cash Raw Materials (a) 75,000 (a) 75,000 (b) 73,000 (c) 152,000 (d) 126,000 Work in Process Finished Goods (b) 67,000 (f) 379,000 (c) 134, ,000 (f) 379,000 (e) 178, ,000 (f) 379,000 Manufacturing Overhead Cost of Goods Sold (b) 6,000 (e) 178,000 (f) 379,000 (g) 28,000 (c) 18, ,000 (d) 126,000 (g) 28,000 28,000 Solutions Manual, Chapter 3 79

10 Exercise 3-8 (10 minutes) 1. Actual direct labor-hours... 8,250 Predetermined overhead rate... \$21.40 = Manufacturing overhead applied... \$176,550 Less: Manufacturing overhead incurred ,500 \$ 4,050 Manufacturing overhead overapplied... \$4, Because manufacturing overhead is overapplied, the cost of goods sold would decrease by \$4,050 and the gross margin would increase by \$4, Managerial Accounting, 12th Edition

12 Exercise 3-10 (30 minutes) 1. a. Raw Materials Inventory ,000 Accounts Payable ,000 b. Work in Process ,000 Manufacturing Overhead... 38,000 Raw Materials Inventory ,000 c. Work in Process... 49,000 Manufacturing Overhead... 21,000 Salaries and Wages Payable... 70,000 d. Manufacturing Overhead ,000 Accumulated Depreciation ,000 e. Manufacturing Overhead ,000 Accounts Payable ,000 f. Work in Process ,000 Manufacturing Overhead ,000 75,000 machine-hours \$4 per machine-hour = \$300,000. g. Finished Goods ,000 Work in Process ,000 h. Cost of Goods Sold ,000 Finished Goods ,000 Accounts Receivable ,000 Sales ,000 \$450, = \$675, Manufacturing Overhead Work in Process (b) 38,000 (f) 300,000 Bal. 35,000 (g) 510,000 (c) 21,000 (b) 152,000 (d) 105,000 (c) 49,000 (e) 130,000 (f) 300,000 6,000 Bal. 26,000 (Overapplied overhead) 82 Managerial Accounting, 12th Edition

15 Exercise 3-12 (continued) 2. Using a predetermined overhead rate, the unit costs would be: Quarter First Second Third Fourth Direct materials... \$240,000 \$120,000 \$ 60,000 \$180,000 Direct labor... 96,000 48,000 24,000 72,000 Manufacturing overhead: Applied at \$4.20 per unit, 350% of direct labor cost, or 140% of direct materials cost , ,000 84, ,000 Total cost... \$672,000 \$336,000 \$168,000 \$504,000 Number of units produced. 80,000 40,000 20,000 60,000 Estimated unit product cost... \$8.40 \$8.40 \$8.40 \$8.40 Solutions Manual, Chapter 3 85

16 Exercise 3-13 (15 minutes) 1. Item (a): Actual manufacturing overhead costs for the year. Item (b): Overhead cost applied to work in process for the year. Item (c): Cost of goods manufactured for the year. Item (d): Cost of goods sold for the year. 2. Manufacturing Overhead... 30,000 Cost of Goods Sold... 30, The overapplied overhead will be allocated to the other accounts on the basis of the amount of overhead applied during the year in the ending balance of each account: Work in process... \$ 32,800 8 % Finished goods... 41, Cost of goods sold , Total cost... \$410, % Using these percentages, the journal entry would be as follows: Manufacturing Overhead... 30,000 Work in Process (8% \$30,000)... 2,400 Finished Goods (10% \$30,000)... 3,000 Cost of Goods Sold (82% \$30,000)... 24, Managerial Accounting, 12th Edition

18 Problem 3-14 (continued) 4. If the actual overhead cost and the actual professional staff hours charged to clients accounts turn out to be exactly as estimated overhead would be underapplied as shown below Predetermined overhead rate (see 3 above) (a).. \$48 \$48 Actual professional staff hours charged to clients accounts (by assumption) (b)... 2,400 2,250 Overhead applied (a) (b)... \$115,200 \$108,000 Actual overhead cost incurred (by assumption) , ,000 Underapplied overhead... \$ 28,800 \$ 36,000 The underapplied overhead is best interpreted in this situation as the cost of idle capacity. Proponents of this method of computing predetermined overhead rates suggest that the underapplied overhead be treated as a period expense that would be separately disclosed on the income statement as Cost of Unused Capacity. 88 Managerial Accounting, 12th Edition

19 Exercise 3-15 (15 minutes) 1. Milling Department: Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$510,000 = =\$8.50 per machine-hour 60,000 machine-hours Assembly Department: Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$800,000 = =125% of direct labor cost \$640,000 direct labor cost 2. Overhead Applied Milling Department: 90 MHs \$8.50 per MH. \$765 Assembly Department: \$ % Total overhead cost applied... \$ Yes; if some jobs require a large amount of machine time and little labor cost, they would be charged substantially less overhead cost if a plantwide rate based on direct labor cost were used. It appears, for example, that this would be true of Job 407 which required considerable machine time to complete, but required only a small amount of labor cost. Solutions Manual, Chapter 3 89

20 Exercise 3-16 (30 minutes) 1. The predetermined overhead rate is computed as follows: Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$170,000 = =\$2.00 per machine-hour 85,000 machine-hours 2. The amount of overhead cost applied to Work in Process for the year would be: 80,000 machine-hours \$2.00 per machine-hour = \$160,000. This amount is shown in entry (a) below: Manufacturing Overhead (Utilities) 14,000 (a) 160,000 (Insurance) 9,000 (Maintenance) 33,000 (Indirect materials) 7,000 (Indirect labor) 65,000 (Depreciation) 40,000 Balance 8,000 Work in Process (Direct materials) 530,000 (Direct labor) 85,000 (Overhead) (a) 160, Overhead is underapplied by \$8,000 for the year, as shown in the Manufacturing Overhead account above. The entry to close out this balance to Cost of Goods Sold would be: Cost of Goods Sold... 8,000 Manufacturing Overhead... 8, Managerial Accounting, 12th Edition

21 Exercise 3-16 (continued) 4. When overhead is applied using a predetermined rate based on machine-hours, it is assumed that overhead cost is proportional to machine-hours. When the actual level of activity turns out to be 80,000 machine-hours, the costing system assumes that the overhead will be 80,000 machine-hours \$2.00 per machine-hour, or \$160,000. This is a drop of \$10,000 from the initial estimated total manufacturing overhead cost of \$170,000. However, the actual total manufacturing overhead did not drop by this much. The actual total manufacturing overhead was \$168,000 a drop of only \$2,000 from the estimate. The manufacturing overhead did not decline by the full \$10,000 because of the existence of fixed costs and/or because overhead spending was not under control. These issues will be covered in more detail in later chapters. Solutions Manual, Chapter 3 91

22 Exercise 3-17 (30 minutes) 1. a. Raw Materials ,000 Accounts Payable ,000 b. Work in Process ,000 Manufacturing Overhead... 54,000 Raw Materials ,000 c. Work in Process... 80,000 Manufacturing Overhead ,000 Wages and Salaries Payable ,000 d. Manufacturing Overhead... 63,000 Accumulated Depreciation... 63,000 e. Manufacturing Overhead... 85,000 Accounts Payable... 85,000 f. Work in Process ,000 Manufacturing Overhead ,000 Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$4,320,000 = =\$7.50 per machine-hour 576,000 machine-hours 40,000 MHs \$7.50 per MH = \$300, Manufacturing Overhead Work in Process (b) 54,000 (f) 300,000 (b) 216,000 (c) 110,000 (c) 80,000 (d) 63,000 (f) 300,000 (e) 85, The cost of the completed job would be \$596,000 as shown in the Work in Process T-account above. The entry for item (g) would be: Finished Goods ,000 Work in Process , The unit product cost on the job cost sheet would be: \$596,000 8,000 units = \$74.50 per unit. 92 Managerial Accounting, 12th Edition

23 Problem 3-18 (45 minutes) 1. a. Raw Materials ,000 Accounts Payable ,000 b. Work in Process ,000 Manufacturing Overhead... 20,000 Raw Materials ,000 c. Work in Process... 90,000 Manufacturing Overhead... 60,000 Sales Commissions Expense... 20,000 Salaries Expense... 50,000 Salaries and Wages Payable ,000 d. Manufacturing Overhead... 13,000 Insurance Expense... 5,000 Prepaid Insurance... 18,000 e. Manufacturing Overhead... 10,000 Accounts Payable... 10,000 f. Advertising Expense... 15,000 Accounts Payable... 15,000 g. Manufacturing Overhead... 20,000 Depreciation Expense... 5,000 Accumulated Depreciation... 25,000 h. Work in Process ,000 Manufacturing Overhead ,000 Estimated total manufacturing overhead cost 99,000 = = 2.20 per MH Estimated total amount of the allocation base 45,000 MHs 50,000 actual MHs 2.20 per MH = 110,000 overhead applied. Solutions Manual, Chapter 3 93

24 Problem 3-18 (continued) i. Finished Goods ,000 Work in Process ,000 j. Accounts Receivable ,000 Sales ,000 Cost of Goods Sold ,000 Finished Goods , Raw Materials Work in Process Bal. 10,000 (b) 140,000 Bal. 4,000 (i) 310,000 (a) 160,000 (b) 120,000 (c) 90,000 (h) 110,000 Bal. 30,000 Bal. 14,000 Finished Goods Manufacturing Overhead Bal. 8,000 (j) 308,000 (b) 20,000 (h) 110,000 (i) 310,000 (c) 60,000 (d) 13,000 (e) 10,000 (g) 20,000 Bal. 10,000 Bal. 13,000 Cost of Goods Sold (j) 308, Manufacturing overhead is underapplied by 13,000 for the year. The entry to close this balance to Cost of Goods Sold would be: Cost of Goods Sold... 13,000 Manufacturing Overhead... 13, Managerial Accounting, 12th Edition

25 Problem 3-18 (continued) 4. Sovereign Millwork, Ltd. Income Statement For the Year Ended June 30 Sales ,000 Cost of goods sold ( 308, ,000) ,000 Gross margin ,000 Selling and administrative expenses: Sales commissions... 20,000 Administrative salaries... 50,000 Insurance expense... 5,000 Advertising expenses... 15,000 Depreciation expense... 5,000 95,000 Net operating income... 82,000 Solutions Manual, Chapter 3 95

26 Problem 3-19 (60 minutes) 1. a. Raw Materials ,000 Accounts Payable ,000 b. Work in Process ,000 Manufacturing Overhead... 38,000 Raw Materials ,000 c. Work in Process ,000 Manufacturing Overhead... 27,000 Sales Commissions Expense... 36,000 Administrative Salaries Expense... 80,000 Salaries and Wages Payable ,000 d. Manufacturing Overhead... 42,000 Accounts Payable... 42,000 e. Manufacturing Overhead... 9,000 Insurance Expense... 1,000 Prepaid Insurance... 10,000 f. Advertising Expense... 50,000 Accounts Payable... 50,000 g. Manufacturing Overhead... 51,000 Depreciation Expense... 9,000 Accumulated Depreciation... 60,000 h. Work in Process ,000 Manufacturing Overhead ,000 \$153,000 =\$4.25 per MH; 40,000 MHs \$4.25 per MH=\$170, ,000 MHs 96 Managerial Accounting, 12th Edition

27 Problem 3-19 (continued) i. Finished Goods ,000 Work in Process ,000 j. Accounts Receivable ,000 Sales ,000 Cost of Goods Sold ,000 Finished Goods , Raw Materials Manufacturing Overhead Bal. 16,000 (b) 190,000 (b) 38,000 (h) 170,000 (a) 200,000 (c) 27,000 Bal. 26,000 (d) 42,000 (e) 9,000 (g) 51,000 Bal. 3,000 Work in Process Cost of Goods Sold Bal. 10,000 (i) 480,000 (j) 475,000 (b) 152,000 (c) 160,000 (h) 170,000 Bal. 12,000 Finished Goods Bal. 30,000 (j) 475,000 (i) 480,000 Bal. 35, Manufacturing overhead is overapplied by \$3,000. The journal entry to close this balance to Cost of Goods Sold is: Manufacturing Overhead... 3,000 Cost of Goods Sold... 3,000 Solutions Manual, Chapter 3 97

28 Problem 3-19 (continued) 4. Ravsten Company Income Statement For the Year Ended December 31 Sales... \$700,000 Cost of goods sold (\$475,000 \$3,000) ,000 Gross margin ,000 Selling and administrative expenses: Sales commissions... \$36,000 Administrative salaries... 80,000 Insurance... 1,000 Advertising... 50,000 Depreciation... 9, ,000 Net operating income... \$ 52, Managerial Accounting, 12th Edition

29 Problem 3-20 (60 minutes) 1. and 2. Cash Accounts Receivable Bal. 8,000 (l) 190,000 Bal. 13,000 (k) 197,000 (k) 197,000 (j) 200,000 Bal. 15,000 Bal. 16,000 Raw Materials Work in Process Bal. 7,000 (b) 40,000 Bal. 18,000 (i) 130,000 (a) 45,000 (b) 32,000 Bal. 12,000 (e) 40,000 (h) 60,000 Bal. 20,000 Finished Goods Prepaid Insurance Bal. 20,000 (j) 120,000 Bal. 4,000 (f) 3,000 (i) 130,000 Bal. 30,000 Bal. 1,000 Plant and Equipment Accumulated Depreciation Bal. 230,000 Bal. 42,000 (d) 28,000 Bal. 70,000 Manufacturing Overhead Accounts Payable (b) 8,000 (h)* 60,000 (l) 100,000 Bal. 30,000 (c) 14,600 (a) 45,000 (d) 21,000 (c) 14,600 (e) 18,000 (g) 18,000 (f) 2,400 Bal. 4,000 (m) 4,000 Bal. 7,600 *\$40, % = \$60,000. Salaries & Wages Payable Retained Earnings (l) 90,000 (e) 93,400 Bal. 78,000 Bal. 3,400 Solutions Manual, Chapter 3 99

30 Problem 3-20 (continued) Capital Stock Sales Commissions Expense Bal. 150,000 (e) 10,400 Administrative Salaries Expense Depreciation Expense (e) 25,000 (d) 7,000 Insurance Expense Miscellaneous Expense (f) 600 (g) 18,000 Cost of Goods Sold Sales (j) 120,000 (j) 200,000 (m) 4, Overhead is underapplied by \$4,000. Entry (m) above records the closing of this underapplied overhead balance to Cost of Goods Sold. 4. Durham Company Income Statement For the Year Ended December 31 Sales... \$200,000 Cost of goods sold (\$120,000 + \$4,000) ,000 Gross margin... 76,000 Selling and administrative expenses: Depreciation expense... \$ 7,000 Sales commissions expense... 10,400 Administrative salaries expense... 25,000 Insurance expense Miscellaneous expense... 18,000 61,000 Net operating income... \$ 15, Managerial Accounting, 12th Edition

31 Problem 3-21 (60 minutes) 1. and 2. Cash Accounts Receivable Bal. 15,000 (c) 225,000 Bal. 40,000 (l) 445,000 (l) 445,000 (m) 150,000 (k) 450,000 Bal. 85,000 Bal. 45,000 Raw Materials Work in Process Bal. 25,000 (b) 90,000 Bal. 30,000 (j) 310,000 (a) 80,000 (b) 85,000 (c) 120,000 (i) 96,000 Bal. 15,000 Bal. 21,000 Finished Goods Prepaid Insurance Bal. 45,000 (k) 300,000 Bal. 5,000 (f) 4,800 (j) 310,000 Bal. 55,000 Bal. 200 Buildings & Equipment Accumulated Depreciation Bal. 500,000 Bal. 210,000 (e) 30,000 Bal. 240,000 Manufacturing Overhead Accounts Payable (b) 5,000 (i)* 96,000 (m) 150,000 Bal. 75,000 (c) 30,000 (a) 80,000 (d) 12,000 (d) 12,000 (e) 25,000 (g) 40,000 (f) 4,000 (h) 17,000 (h) 17,000 Bal. 3,000 Bal. 74,000 \$80,000 * = 80% of direct labor cost; \$120, = \$96,000. \$100,000 Retained Earnings Capital Stock Bal. 125,000 Bal. 250,000 Solutions Manual, Chapter 3 101

32 Problem 3-21 (continued) Salaries Expense Depreciation Expense (c) 75,000 (e) 5,000 Insurance Expense Shipping Expense (f) 800 (g) 40,000 Cost of Goods Sold Sales (k) 300,000 (k) 450, Manufacturing overhead was overapplied by \$3,000 for the year. This balance would be allocated between Work in Process, Finished Goods, and Cost of Goods Sold in proportion to the ending balances in these accounts. The allocation would be: Work in Process, 12/31... \$ 21, % Finished Goods, 12/ , Cost of Goods Sold, 12/ , \$376, % Manufacturing Overhead... 3,000 Work in Process (5.6% \$3,000) Finished Goods (14.6% \$3,000) Cost of Goods Sold (79.8% \$3,000)... 2, Fantastic Props, Inc. Income Statement For the Year Ended December 31 Sales... \$450,000 Cost of goods sold (\$300,000 \$2,394) ,606 Gross margin ,394 Selling and administrative expenses: Salaries expense... \$75,000 Depreciation expense... 5,000 Insurance expense Shipping expense... 40, ,800 Net operating income... \$ 31, Managerial Accounting, 12th Edition

33 Problem 3-22 (60 minutes) 1. Raw Materials Work in Process Bal. 40,000 (a) 33,500 Bal. 77,800* (e) 60,700 (a) 29,500 (b) 20,000 (d) 32,000 Bal. 98,600 Finished Goods Manufacturing Overhead Bal. 85,000 (a) 4,000 (d) 32,000 (e) 60,700 (b) 8,000 (c) 19,000 Salaries & Wages Payable Accounts Payable (b) 28,000 (c) 19,000 * Job 105 materials, labor, and overhead at November 30.. \$50,300 Job 106 materials, labor, and overhead at November ,500 Total Work in Process inventory at November \$77, a. Work in Process... 29,500 * Manufacturing Overhead... 4,000 Raw Materials... 33,500 *\$8,200 + \$21,300 = \$29,500. This entry is posted to the T-accounts as entry (a) above. b. Work in Process... 20,000 * Manufacturing Overhead... 8,000 Salaries and Wages Payable... 28,000 *\$4,000 + \$6,000 + \$10,000 = \$20,000. This entry is posted to the T-accounts as entry (b) above. c. Manufacturing Overhead... 19,000 Accounts Payable... 19,000 This entry is posted to the T-accounts as entry (c) above. Solutions Manual, Chapter 3 103

34 Problem 3-22 (continued) 3. Apparently, the company uses a predetermined overhead rate of 160% of direct labor cost. This figure can be determined by relating the November applied overhead cost on the job cost sheets to the November direct labor cost shown on these sheets. For example, in the case of Job 105: November overhead cost \$20,800 = =160% of direct labor cost November direct labor cost \$13,000 The overhead cost applied to each job during December was: Job 105: \$4, %... \$ 6,400 Job 106: \$6, %... 9,600 Job 107: \$10, %... 16,000 Total applied overhead... \$32,000 The entry to record the application of overhead cost to jobs would be as follows: Work in Process... 32,000 Manufacturing Overhead... 32,000 The entry is posted to the T-accounts as entry (d) above. 4. The total cost of Job 105 was: Direct materials... \$16,500 Direct labor (\$13,000 + \$4,000)... 17,000 Manufacturing overhead applied (\$17, %)... 27,200 Total cost... \$60,700 The entry to record the transfer of the completed job would be as follows: Finished Goods... 60,700 Work in Process... 60,700 This entry is posted to the T-accounts as entry (e) above. 104 Managerial Accounting, 12th Edition

35 Problem 3-22 (continued) 5. As shown in the above T-accounts, the balance in Work in Process at December 31 was \$98,600. The breakdown of this amount between Jobs 106 and 107 is: Job 106 Job 107 Total Direct materials... \$17,500 \$21,300 \$38,800 Direct labor... 13,000 10,000 23,000 Manufacturing overhead... 20,800 16,000 36,800 Total cost... \$51,300 \$47,300 \$98,600 Solutions Manual, Chapter 3 105

36 Problem 3-23 (30 minutes) 1. Research & Documents predetermined overhead rate: Predetermined Estimated total overhead cost = overhead rate Estimated total amount of the allocation base \$700,000 = =\$35 per hour 20,000 hours Litigation predetermined overhead rate: Predetermined Estimated total overhead cost = overhead rate Estimated total amount of the allocation base 2. \$320,000 40% of direct = = attorney cost \$800,000 direct attorney cost Research & Documents overhead applied: 18 hours \$35 per hour... \$ 630 Litigation overhead applied: \$2,100 40% Total overhead cost... \$1, Total cost of Case 618 3: Departments Research & Documents Litigation Total Materials and supplies... \$ 50 \$ 30 \$ 80 Direct attorney cost ,100 2,510 Overhead cost applied ,470 Total cost... \$1,090 \$2,970 \$4, Managerial Accounting, 12th Edition

37 Problem 3-23 (continued) 4. Department Research & Documents Litigation Departmental overhead cost incurred... \$770,000 \$300,000 Departmental overhead cost applied: 23,000 hours \$35 per hour ,000 \$725,000 40% ,000 Underapplied (or overapplied) overhead... \$ (35,000) \$ 10,000 Solutions Manual, Chapter 3 107

38 Problem 3-24 (90 minutes) 1. a. Raw Materials ,000 Accounts Payable ,000 b. Work in Process ,000 Manufacturing Overhead... 13,000 Raw Materials ,000 c. Work in Process ,000 Manufacturing Overhead... 60,000 Salaries and Wages Payable ,000 d. Salaries Expense ,000 Salaries and Wages Payable ,000 e. Prepaid Insurance... 38,000 Cash... 38,000 Manufacturing Overhead... 39,400 Insurance Expense Prepaid Insurance... 40,000 f. Marketing Expense ,000 Accounts Payable ,000 g. Manufacturing Overhead... 28,000 Depreciation Expense... 12,000 Accumulated Depreciation... 40,000 h. Manufacturing Overhead... 12,600 Accounts Payable... 12,600 i. Work in Process ,000 Manufacturing Overhead ,000 \$135,000 =\$7.50 per DLH; 20,800 DLH \$7.50 per DLH = \$156, ,000 DLH 108 Managerial Accounting, 12th Edition

39 Problem 3-24 (continued) j. Finished Goods... 1,106,000 Work in Process... 1,106,000 k. Accounts Receivable... 1,420,000 Sales... 1,420,000 Cost of Goods Sold... 1,120,000 Finished Goods... 1,120,000 l. Cash... 1,415,000 Accounts Receivable... 1,415,000 m. Accounts Payable ,000 Salaries and Wages Payable ,000 Cash... 1,318, Cash Accounts Receivable Bal. 9,000 (e) 38,000 Bal. 30,000 (l) 1,415,000 (l) 1,415,000 (m) 1,318,000 (k) 1,420,000 Bal. 68,000 Bal. 35,000 Raw Materials Work in Process Bal. 16,000 (b) 830,000 Bal. 21,000 (j) 1,106,000 (a) 820,000 (b) 817,000 (c) 140,000 (i) 156,000 Bal. 6,000 Bal. 28,000 Finished Goods Prepaid Insurance Bal. 38,000 (k) 1,120,000 Bal. 7,000 (e) 40,000 (j) 1,106,000 (e) 38,000 Bal. 24,000 Bal. 5,000 Buildings and Equipment Accumulated Depreciation Bal. 300,000 Bal. 128,000 (g) 40,000 Bal. 168,000 Solutions Manual, Chapter 3 109

40 Problem 3-24 (continued) Manufacturing Overhead (b) 13,000 (i) 156,000 (c) 60,000 (e) 39,400 (g) 28,000 (h) 12,600 Bal. 3,000 Salaries & Wages Payable Accounts Payable (m) 348,000 Bal. 3,000 (m) 970,000 Bal. 60,000 (c) 200,000 (a) 820,000 (d) 150,000 (f) 100,000 (h) 12,600 Bal. 5,000 Bal. 22,600 Retained Earnings Capital Stock Bal. 30,000 Bal. 200,000 Marketing Expense Depreciation Expense (f) 100,000 (g) 12,000 Insurance Expense Salaries Expense (e) 600 (d) 150,000 Cost of Goods Sold Sales (k) 1,120,000 (k) 1,420, Managerial Accounting, 12th Edition

41 Problem 3-24 (continued) 3. Manufacturing overhead is overapplied by \$3,000 for the year. The entry to close this balance to Cost of Goods Sold would be: Manufacturing Overhead... 3,000 Cost of Goods Sold... 3, Celestial Displays, Inc. Income Statement For the Year Ended December 31 Sales... \$1,420,000 Cost of goods sold (\$1,120,000 \$3,000)... 1,117,000 Gross margin ,000 Selling and administrative expenses: Salaries expense... \$150,000 Insurance expense Marketing expense ,000 Depreciation expense... 12, ,600 Net operating income... \$ 40,400 Solutions Manual, Chapter 3 111

42 Problem 3-25 (30 minutes) 1. Preparation Department predetermined overhead rate: Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$416,000 = =\$5.20 per machine-hour 80,000 machine-hours Fabrication Department predetermined overhead rate: Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$720,000 = =180% of materials cost \$400,000 materials cost 2. Preparation Department overhead applied: 350 machine-hours \$5.20 per machine-hour... \$1,820 Fabrication Department overhead applied: \$1,200 direct materials cost 180%... 2,160 Total overhead cost... \$3, Total cost of Job 127: Preparation Fabrication Total Direct materials... \$ 940 \$1,200 \$2,140 Direct labor ,690 Manufacturing overhead... 1,820 2,160 3,980 Total cost... \$3,470 \$4,340 \$7,810 Unit product cost for Job 127: \$7,810 Average cost per unit = = \$ per unit 25 units 112 Managerial Accounting, 12th Edition

43 Problem 3-25 (continued) 4. Preparation Fabrication Manufacturing overhead cost incurred... \$390,000 \$740,000 Manufacturing overhead cost applied: 73,000 machine-hours \$5.20 per machine-hour ,600 \$420,000 direct materials cost 180% ,000 Underapplied (or overapplied) overhead.. \$ 10,400 \$(16,000) Solutions Manual, Chapter 3 113

46 Problem 3-27 (45 minutes) 1. The cost of raw materials put into production was: Raw materials inventory, 1/1... \$ 30,000 Debits (purchases of materials) ,000 Materials available for use ,000 Raw materials inventory, 12/ ,000 Materials requisitioned for production... \$390, Of the \$390,000 in materials requisitioned for production, \$320,000 was debited to Work in Process as direct materials. Therefore, the difference of \$70,000 (\$390,000 \$320,000 = \$70,000) would have been debited to Manufacturing Overhead as indirect materials. 3. Total factory wages accrued during the year (credits to the Factory Wages Payable account)... \$175,000 Less direct labor cost (from Work in Process) ,000 Indirect labor cost... \$ 65, The cost of goods manufactured for the year was \$810,000 the credits to Work in Process. 5. The Cost of Goods Sold for the year was: Finished goods inventory, 1/1... \$ 40,000 Add: Cost of goods manufactured (from Work in Process) ,000 Goods available for sale ,000 Finished goods inventory, 12/ ,000 Cost of goods sold... \$720, The predetermined overhead rate was: Predetermined = Manufacturing overhead cost applied overhead rate Direct materials cost \$400,000 = =125% of direct materials cost \$320, Managerial Accounting, 12th Edition

47 Problem 3-27 (continued) 7. Manufacturing overhead was overapplied by \$15,000, computed as follows: Actual manufacturing overhead cost for the year (debits)... \$385,000 Applied manufacturing overhead cost (from Work in Process this would be the credits to the Manufacturing Overhead account) ,000 Overapplied overhead... \$(15,000) 8. The ending balance in Work in Process is \$90,000. Direct labor makes up \$18,000 of this balance, and manufacturing overhead makes up \$40,000. The computations are: Balance, Work in Process, 12/31... \$90,000 Less: Direct materials cost (given)... (32,000) Manufacturing overhead cost (\$32, %)... (40,000) Direct labor cost (remainder)... \$18,000 Solutions Manual, Chapter 3 117

48 Problem 3-28 (60 minutes) 1. a. Predetermined = Estimated total manufacturing overhead cost overhead rate Estimated total amount of the allocation base \$126,000 = =150% of direct labor cost \$84,000 direct labor cost b. Actual manufacturing overhead costs: Insurance, factory... \$ 7,000 Depreciation of equipment... 18,000 Indirect labor... 42,000 Property taxes... 9,000 Maintenance... 11,000 Rent, building... 36,000 Total actual costs ,000 Applied manufacturing overhead costs: \$80, % ,000 Underapplied overhead... \$ 3, Pacific Manufacturing Company Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning... \$ 21,000 Add purchases of raw materials ,000 Total raw materials available ,000 Deduct raw materials inventory, ending... 16,000 Raw materials used in production... \$138,000 Direct labor... 80,000 Manufacturing overhead applied to work in process ,000 Total manufacturing cost ,000 Add: Work in process, beginning... 44, ,000 Deduct: Work in process, ending... 40,000 Cost of goods manufactured... \$342, Managerial Accounting, 12th Edition

49 Problem 3-28 (continued) 3. Cost of goods sold: Finished good inventory, beginning... \$ 68,000 Add: Cost of goods manufactured ,000 Goods available for sale ,000 Deduct: Finished goods inventory, ending... 60,000 Cost of goods sold... \$350,000 Underapplied or overapplied overhead may be closed directly to Cost of Goods Sold or allocated among Work in Process, Finished Goods, and Cost of Goods Sold in proportion to the overhead applied during the year in the ending balance of each of these accounts. 4. Direct materials... \$ 3,200 Direct labor... 4,200 Overhead applied (150% 4,200)... 6,300 Total manufacturing cost... \$13,700 \$13, % = \$19,180 price to customer. 5. The amount of overhead cost in Work in Process was: \$8,000 direct labor cost 150% =\$12,000 The amount of direct materials cost in Work in Process was: Total ending work in process... \$40,000 Deduct: Direct labor... \$ 8,000 Manufacturing overhead... 12,000 20,000 Direct materials... \$20,000 The completed schedule of costs in Work in Process was: Direct materials... \$20,000 Direct labor... 8,000 Manufacturing overhead... 12,000 Work in process inventory... \$40,000 Solutions Manual, Chapter 3 119

51 Problem 3-29 (continued) 5. Cost of goods sold if the underapplied overhead is closed directly to cost of goods sold (\$2,800,000 + \$270,000)... \$3,070,000 Cost of goods sold if the underapplied overhead is allocated among the accounts (\$2,800,000 + \$189,000)... 2,989,000 Difference in cost of goods sold... \$ 81,000 Thus, net operating income will be \$81,000 greater if the underapplied overhead is allocated among Work In Process, Finished Goods, and Cost of Goods Sold rather than closed directly to Cost of Goods Sold. Solutions Manual, Chapter 3 121

52 Problem 3-30 (120 minutes) 1. a. Raw Materials ,000 Accounts Payable ,000 b. Work in Process ,000 Raw Materials ,000 c. Manufacturing Overhead... 21,000 Accounts Payable... 21,000 d. Work in Process ,000 Manufacturing Overhead... 90,000 Salaries Expense ,000 Salaries and Wages Payable ,000 e. Manufacturing Overhead... 15,000 Accounts Payable... 15,000 f. Advertising Expense ,000 Accounts Payable ,000 g. Manufacturing Overhead... 45,000 Depreciation Expense... 5,000 Accumulated Depreciation... 50,000 h. Manufacturing Overhead... 72,000 Rent Expense... 18,000 Accounts Payable... 90,000 i. Miscellaneous Expense... 17,000 Accounts Payable... 17,000 j. Work in Process ,000 Manufacturing Overhead ,000 Estimated total manufacturing overhead cost \$248,000 = Estimated direct materials cost \$155, % of direct = materials cost. \$150,000 direct materials cost 160% = \$240,000 applied. 122 Managerial Accounting, 12th Edition

53 Problem 3-30 (continued) k. Finished Goods ,000 Work in Process ,000 l. Accounts Receivable... 1,000,000 Sales... 1,000,000 Cost of Goods Sold ,000 Finished Goods , Accounts Receivable Raw Materials (l) 1,000,000 Bal. 18,000 (b) 150,000 (a) 142,000 Bal. 10,000 Work in Process Finished Goods Bal. 24,000 (k) 590,000 Bal. 35,000 (l) 600,000 (b) 150,000 (k) 590,000 (d) 216,000 (j) 240,000 Bal. 40,000 Bal. 25,000 Manufacturing Overhead Accounts Payable (c) 21,000 (j) 240,000 (a) 142,000 (d) 90,000 (c) 21,000 (e) 15,000 (e) 15,000 (g) 45,000 (f) 130,000 (h) 72,000 (h) 90,000 Bal. 3,000 (i) 17,000 Accumulated Depreciation Depreciation Expense (g) 50,000 (g) 5,000 Salaries & Wages Payable Salaries Expense (d) 451,000 (d) 145,000 Miscellaneous Expense Advertising Expense (i) 17,000 (f) 130,000 Solutions Manual, Chapter 3 123

### AGENDA: JOB-ORDER COSTING

TM 3-1 AGENDA: JOB-ORDER COSTING A. The documents in a job-order costing system. 1. Materials requisition form. 2. Direct labor time ticket. 3. Job cost sheet. B. Applying overhead using a predetermined

### Full file at

Chapter 2 Systems Design: Job-Order Costing Solutions to Questions 2-1 By definition, overhead costs cannot be practically traced to products or jobs. Therefore, overhead costs must be allocated rather

### Chapter 2. Job Order Costing and Analysis QUESTIONS

Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between

### rate is used to apply overhead costs to products. Our purpose in this section is to provide a detailed example of cost flows in an ABC system.

Appendix 6A Cost Flows in an -Based Costing System 6A-1 Cost Flows in an -Based Costing System In Chapter 4, we discussed the flow of costs in a job-order costing system. The flow of costs through raw

### Chapter 2. Job Order Costing and Analysis QUESTIONS

Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between

### QUESTIONS. any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between

### Full file at Job Order Costing and Analysis QUESTIONS

Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between

### Full file at QUESTIONS

Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between

### 1. Cost accounting involves the measuring, recording, and reporting of: A. product costs. B. future costs. C. manufacturing processes.

1. Cost accounting involves the measuring, recording, and reporting of: A. product costs. B. future costs. C. manufacturing processes. D. managerial accounting decisions. 2. In accumulating raw materials

### Problem Exercise 3-12

Exercise 3-12 1. The overhead applied to Ms. Miyami s account would be computed as follows: 2002 2001 Estimated overhead cost (a)... \$144,000 \$144,000 Estimated professional staff hours (b)... 2,250 2,400

### COMPREHENSIVE EXAMINATION A

COMPREHENSIVE EXAMINATION A (Chapters 1-4) Approximate Problem Topic Points Minutes A - I Multiple Choice... 20 20 A - II Cost of Goods Manufactured and Sold... 20 15 A - III Job Order Cost Accounting...

### Chapter 17 Job Order Costing Study Guide Solutions Fill-in-the-Blank Equations. Exercises. 1. Estimated activity base. 2. Underapplied. 3.

Chapter 17 Job Order Costing Study Guide Solutions Fill-in-the-Blank Equations 1. Estimated activity base 2. Underapplied 3. Overapplied Exercises 1. An automobile manufacturer produces various lines of

### An accounting perspective: Business insight

An accounting perspective: Business insight Engineers for automobile companies in the United States believe that Japanese manufacturers can build cars for considerably less than their US counterparts.

### Full file at

Chapter 2 Job Order Costing ANSWERS TO QUESTIONS 1. The difference between job order costing and process costing relates to the type of product or service the company provides, and whether that product

### ACCT Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS

PROCESS OPERATIONS ACCT 102 - Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS In Chapter 15, we studied the job order cost accounting system used when a company manufactures products

JOB COSTING AND OVERHEAD Key Topics to Know Differences and similarities between job order and process costing Key document is the Job Cost Sheet Flow of product costs through inventory accounts to cost

### Cost Systems. Terms Cost Accounting Process Cost System Job Order Cost System

Terms Cost Accounting Process Cost System Job Order Cost System Cost Systems Job-Order Costing Used for custom or unique items Each job is accounted for separately Measures cost based on completed job

### Chapter 2: Costing Systems: Job Order Costing

Chapter 2: Costing Systems: Job Order Costing Student: 1. A job order costing system measures costs of each processes using an inventory account for each. 2. The computations for costs to be transferred

### Exercise E21-1 page 886. (a) Factory Labor 103,000 Factory Wages Payable 90,000 Employer Payroll Taxes Payable 9,000

Exercise E21-1 page 886 (a) Factory Labor 103,000 Factory Wages Payable 90,000 Employer Payroll Taxes Payable 9,000 Employer Fringe Benefits Payable 4,000 (b) Work in Process Inventory 87,550 Manufacturing

### Mona Loa Malaysian Manufacturing cost per bag... \$6.00 \$5.00 Add markup at 30% Selling price per bag... \$7.80 \$6.50

Case 8-24 1. a. The predetermined overhead rate would be computed as follows: Expected manufacturing overhead cost \$3,000,000 = Estimated direct labour-hours 50,000 DLHs =\$60 per DLH b. The unit product

### JOB ORDER COSTING. LO 1: Cost Systems. Determine whether job order costing or process costing would be more appropriate for each industry.

JOB ORDER COSTING Terms Cost Accounting Process Cost System Job Order Cost System LO 1: Cost Systems Job-Order Costing Used for custom or unique items Each job is accounted for separately Measures cost

### CHAPTER 2. Job Order Costing 1, 2, 3, 4 5, 6, 7, 8 1, 2, 3, 4

CHAPTER 2 Job Order Costing ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems 1. Explain the characteristics and purposes of cost accounting.

### CHAPTER 2. Job Order Costing. Brief A B Study Objectives Questions Exercises Do It! Exercises Problems Problems

CHAPTER 2 Job Order Costing ASSIGNMENT CLASSIFICATION TABLE Brief A B Study Objectives Questions Exercises Do It! Exercises Problems Problems 1. Explain the characteristics 1, 2, 3, 4 and purposes of cost

### Managerial Accounting 10th Edition by Crosson and Needles Solutions Manual

Managerial Accounting 10th Edition by Crosson and Needles Solutions Manual Discussion Questions DQ1. DQ2. DQ3. The accounting concept of cost measurement focuses on determining the amount of the cost.

### FINANCIAL STATEMENTS

FINANCIAL STATEMENTS Key Topics to Know Cost of good sold statement is prepared from the finished goods inventory account. Cost of goods sold statement has the same format as in financial accounting. Cost

### Chapter 2--Cost Terminology and Cost Behaviors

Chapter 2--Cost Terminology and Cost Behaviors TRUE/FALSE 1. A cost object is anything for which management wants to collect or accumulate costs. ANS: T PTS: 1 DIF: Easy OBJ: 2-1 2. A production plant

### CHAPTER 17 (FIN MAN); CHAPTER 2 (MAN) JOB ORDER COST SYSTEMS

CHAPTER 17 (FIN MAN); CHAPTER 2 (MAN) JOB ORDER COST SYSTEMS Number Objective Description Difficulty Time AACSB IMA SS GL EO17(2)-1 17-1 Easy 5 min Analytic Cost Management EO17(2)-2 17-1 Easy 5 min Analytic

### Full file at

Full file at https://fratstock.eu Chapter 2 Job-Order Costing and Modern Manufacturing Practices QUESTIONS 1. Manufacturers need product costing systems in order to measure and record the cost of manufactured

### *Brief Exercise

*Brief Exercise 19-1 0 Presented below are incomplete manufacturing cost data. Determine the missing amounts for three different situations. Direct Materials Used Direct Labor Used Factory Overhead (a)

### A325 Exam 1 review Spring, 2010

A325 Exam 1 review Spring, 2010 The exam is seven problems (each with subsidiary questions) and you have ONE HOUR AND FIFTEEN minutes (1:15) to complete it. You are permitted to bring one page of notes

### Chapter 4. Systems Design: Process Costing. Types of Costing Systems Used to Determine Product Costs. Job-order Costing.

4-1 Chapter 4 Systems Design: Process Costing Types of Costing Systems Used to Determine Product Costs Process Costing Job-order Costing F Many units of a single, homogeneous product flow evenly through

### Chapter 2--Cost Terminology and Cost Behaviors

Chapter 2--Cost Terminology and Cost Behaviors Student: 1. A cost object is anything for which management wants to collect or accumulate costs. 2. A production plant could be a cost object. 3. A specific

### Chapter 02 - Cost Concepts and Cost Allocation

Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous

### Chapter 02 - Cost Concepts and Cost Allocation

Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous

### Full file at CHAPTER 2

CHAPTER 2 Job Order Costing ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems 1. Describe cost systems and the flow of costs in a job order system.

### 6. Refer to the Michael's Manufacturing, Inc. information above. Raw materials used for July is:

Review II NUMBER 1. Which of the following is a characteristic of managerial accounting? a. It is used primarily by external users. b. It often lacks flexibility. c. It is often future-oriented. d. The

### MANAGERIAL ACCOUNTING (135) Post-secondary

Page 1 of 10 Contestant Number: Time: Rank: MANAGERIAL ACCOUNTING (135) Post-secondary REGIONAL 2016 Multiple Choice & Short Answer Section: Multiple Choice (20 @ 2 points each) Matching (50 @ 1 point

### Chapter 20: Job Order Costing

Chapter 20: Job Order Costing DO IT! 1 Accumulating Manufacturing Costs During the current month, Ringling Company incurs the following manufacturing costs: (a) Raw material purchases of \$4,200 on account.

### CHAPTER 2. Job-Order Costing for Manufacturing and Service Companies. Summary of Questions by Objectives and Bloom s Taxonomy

CHAPTER 2 Job-Order Costing for Manufacturing and Service Companies Summary of Questions by Objectives and Bloom s Taxonomy Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements

### Job-Order Costing for Manufacturing and Service Companies

CHAPTER 2 Job-Order Costing for Manufacturing and Service Companies Summary of Questions by Objectives and Bloom s Taxonomy Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements

### CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements

CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 K 8. 2 K 15. 2 K 22.

### REVIEW FOR EXAM NO. 1, ACCT-2302 (SAC) (Chapters 14-16)

A. Chapter 14 (Managerial Accounting). 1. Purposes and Principles. (Page 632) REVIEW FOR EXAM NO. 1, ACCT-2302 (SAC) (Chapters 14-16) a. Provides economic/financial information (both historical and estimated)

### - Product costing Systems are used to compute the product cost per unit. - Product cost per unit is needed for a variety of purpose:

Introduction: - Product costing Systems are used to compute the product cost per unit. - Product cost per unit is needed for a variety of purpose: o In financial accounting; Used to value inventory and

### Chapter 3 Activity-Based Costing

Chapter 3 -Based Costing Solutions to Questions 3-1 The most common methods of assigning overhead costs to products are plantwide overhead rates, departmental overhead rates, and activity-based costing.

### CHAPTER 2. Job Order Costing 1, 2, 3, 4 5, 6, 7, 8 1, 2, 3, 4

CHAPTER 2 Job Order Costing ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems 1. Explain the characteristics and purposes of cost accounting.

### DEFINITIONS AND CONCEPTS

DEFINITIONS AND CONCEPTS ** CONCEPTS AND DEFINITIONS IN THIS MODULE APPEAR IN VARIOUS CHAPTERS ** Key Terms and Concepts to Know Major Management Activities Planning - formulating long and short-term plans

### ACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems

Page 1 ACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems This is an independent effort. Do your own work! The ACE tutors and the SI may not assist you on this sample exam prior

### Full file at

Chapter 02 Job Order Costing and Analysis True / False Questions 1. A manufacturing company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Goods

### 3. Which is not an inventory account manufacturing companies have: a) Raw Materials b) Manufacturing Overhead c) Work in Process d) Finished Goods

Chapter 1 Question Review 1. Which of the following is not a characteristic of managerial accounting: a) Emphasizes decisions affecting the future b) Mandatory for external reports c) Need not follow GAAP

### 70% of total manufacturing costs for the period

Midterm Review Class #1.1- COGM; Income Statement, Cost Behaviour On January 30, 2013, the manufacturing facility of Trucks R Us was severely damaged by a fire. As a result, the company s direct materials,

### Chapter 2--Measuring Product Costs

Chapter 2--Measuring Product Costs Student: 1. Which of the following is notone of the three major manufacturing cost categories? A. Direct materials costs that can be easily traced to a product B. Direct

### MULTIPLE-CHOICE QUESTIONS

MULTIPLE-CHOICE QUESTIONS 5-1. d 5-2. c 5-3. a 5-4. b 5-5. b 5-6. a 5-7. a 5-8. e 5-9. a 5-10. b 5-11. c 5-12. e 5-13. d Direct materials \$ 17,500 Direct labor 10,000 Applied overhead (\$5 500 DLH) 2,500

### Work4Me Managerial Accounting Simulations. Problem Two

Work4Me Managerial Accounting Simulations 1 st Web-Based Edition Problem Two Job-Order Costing Elmwood Manufacturing, Incorporated Page 1 INTRODUCTION Elmwood Manufacturing, Incorporated operates in a

### Student ID: Exam: RR - THE COSTING OF PRODUCTS. Use the following information to answer this question.

Student ID: 21822007 Exam: 061681RR - THE COSTING OF PRODUCTS When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If

### Full file at

Chapter 02--Job Order Costing Student: 1. Cost accounting systems are used to supply cost data information on costs incurred by a manufacturing process or department. 2. A manufacturer may employ a job

### ACCT 102 GROUP PROJECT INSTRUCTIONS

ACCT 102 GROUP PROJECT INSTRUCTIONS In the business world you will be required to communicate and coordinate projects and results with coworkers and supervisors, therefore, it is up to the group to decide

### Work4Me Managerial Accounting Simulations. Problem Four

Work4Me Managerial Accounting Simulations 1 st Web-Based Edition Problem Four Process Costing Patterson Tooling Company Page 1 INTRODUCTION Patterson Tooling Company manufactures a single product. The

### Cost Accounting. Multiple Choice Questions:

Multiple Choice Questions: 1- The Value Chain a- Involves external companies as well as internal activities. b- Is the sequence of business functions in which customer usefulness is added to products or

### Student ID: Exam: RR - THE COSTING OF PRODUCTS. Use the following information to answer this question.

Student ID: 21834886 Exam: 061681RR - THE COSTING OF PRODUCTS When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If

### 1. F; I 2. V ; D 3. V ; D 4. F; I 5. F; I 6. F; I 7. V ; D 8. F; I 9. F; I 10. V ; D 11. F; I 12. F; I 13. F; I 14. F; I

SOLUTIONS TO EERCISES EERCISE 2-1 (15 minutes) 1. F; I 2. V ; D 3. V ; D 4. F; I 5. F; I 6. F; I 7. V ; D 8. F; I 9. F; I 10. V ; D 11. F; I 12. F; I 13. F; I 14. F; I EERCISE 2-2 (15 minutes) 1. Product

### Chapter 2--Job Order Costing

Chapter 2--Job Order Costing Student: 1. Cost accounting systems are used to supply cost data information on costs incurred by a manufacturing process or department. 2. A manufacturer may employ a job

### Inventories. Raw material 61,000 81,000 Work in process 80,000 30,000 Finished goods 90, ,000

Beginning Inventories Ending Raw material 61,000 81,000 Work in process 80,000 30,000 Finished goods 90,000 110,000 Direct material used 318,000 Direct Labour 230,000 Manufecturing Overhead-60% of Direct

### 1. The cost of an item is the sacrifice of resources made to acquire it. 2. An expense is a cost charged against revenue in an accounting period.

Chapter 02 Cost Concepts and Behavior True / False Questions 1. The cost of an item is the sacrifice of resources made to acquire it. True False 2. An expense is a cost charged against revenue in an accounting

### Chapter 17. Objectives PRBA007 TOPIC TWO C. 1of 13. Unit costs for decision-making

17-0 17-1 Chapter 17 Unit costs for decision-making Objectives 17-2 Once you have completed this part of the topic, you should be able to: 1. Explain the importance of unit costs. 2. Identify the costs

### Chapter 6 Process Costing

Chapter 6: Process Costing 239 Chapter 6 Process Costing LEARNING OBJECTIVES Chapter 6 addresses the following questions: LO1 LO2 LO3 LO4 LO5 Assign costs to mass-produced products using equivalent units

### Lecture 2: Flow of resource costs

Lecture 2: Flow of resource costs Cost Object: anything for which a separate measurement of costs is required, e.g. products, services, customers, projects, processes, segments of the value chain, divisions/departments,

### Welcome to: FNSACC507A Provide Management Accounting Information

Welcome to: FNSACC507A Provide Management Accounting Information Week 1 Chapter 1 COST CONCEPTS FNSACC507A Provide Management Accounting Information By the end of this lesson, you will be able to 1. Explain

### Chapter 2--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Chapter 2--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows Student: 1. Which of the following types of organizations is most likely to have a raw materials inventory account?

### 2 Cost Concepts and Behavior

2 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An expense is

### Chapter 3--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Chapter 3--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows Student: 1. Which of the following types of organizations is most likely to have a raw materials inventory account?

### Full file at

Chapter 2 Cost Concepts and Behavior rue/false Questions F 1. he cost of an item is the sacrifice made to acquire it. Answer: rue Difficulty: Simple Learning Objective: 1 F 2. A cost can either be an asset

### CHAPTER 7 Accounting 1B. Activity-Based Costing(ABC): A tool to Aid Decision Making

CHAPTER 7 Accounting 1B Activity-Based Costing(ABC): A tool to Aid Decision Making Global Business Situation Using technology and productivity More emphasis on cost measurement and control Increasingly

### Chapter 2 Job-Order Costing for Manufacturing and Service Companies

Chapter 2 Job-Order Costing for Manufacturing and Service Companies QUESTIONS 1. Manufacturing costs include all costs associated with the production of goods. Examples of manufacturing costs are: labor

Job Costing Systems Types of Product-Costing Systems Process Costing Job-Order Costing Used for production of large, unique, high-cost items. Built to order rather than mass produced. Many costs can be

### Chapter 02 Cost Concepts and Behavior

Chapter 02 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An

### Chapter 02 Cost Concepts and Behavior

Chapter 02 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An

### 17(2) Job Order Costing. chapter OPENING COMMENTS

ing chapter 17(2) OPENING COMMENTS Chapter 17(2) introduces students to managerial job order cost systems. Students will be exposed to the terminology used to describe costs related to manufacturing. The

### Full file at

Chapter 02 Cost Concepts and Behavior True / False Questions 1. The cost of an item is the sacrifice made to acquire it. True False 2. An expense is an expired cost matched with revenues in a specific

### Sales salaries. Factory repairs. Advertising Office supplies used \$ \$

E19-4, Determine the total amount of various types of costs. Drew Company reports the following costs and expenses in May. Factory utilities \$11.500 \$69.100 Depreciation on factory equipment Depreciation

### COST OF GOODS MANUFACTURES B.COM. PART II

COST OF GOODS MANUFACTURES B.COM. PART II Q#1 Following are the balances appear on the Trial Balance of SAMREEN & Co. for the year ended April 30, 1980. Inventory of Goods in Process April, 01 Rs.109,000

### COST ACCOUNTING SYSTEMS

19-2 C 1 COST ACCOUNTING SYSTEMS Process Costing Job Costing Chapter 20 Used for production of large, unique, or high-cost items. Built to order rather than mass produced. Many costs can be directly traced

### COST ACCOUNTING b.com part II Regular & Private (SUPPLEMENTARY) Solved Paper. Compiled & Solved by: Sameer Hussain

COST ACCOUNTING b.com part II 2014 Regular & Private (SUPPLEMENTARY) Solved Paper Compiled & Solved by: Sameer Hussain Instructions: (1) Attempt any FIVE questions. (2) All questions carry equal marks.

### Part 1 Study Unit 5. Cost Accumulations Systems Jim Clemons, CMA Ronald Schmidt, CMA, CFM

Part 1 Study Unit 5 Cost Accumulations Systems Jim Clemons, CMA Ronald Schmidt, CMA, CFM 1 Overview Cost accounting systems record manufacturing activities using a perpetual inventory system, which continuously

### ACCT323, Cost Analysis & Control H Guy Williams, 2005

Costing is a very interesting area because there are many different ways to come up with cost for something. But these principles are generally applicable across the board. Because at any point once you

### An Introduction to Cost Terms and Purposes

CHAPTER 2 An Introduction to Cost Terms and Purposes Overview This chapter introduces the basic terminology of cost accounting. Communication among managers and management accountants is greatly facilitated

### REVISION: MANUFACTURING 12 SEPTEMBER 2013

REVISION: MANUFACTURING 12 SEPTEMBER 2013 Lesson Description In this lesson we: Revise ledger accounts and the production cost statement Key Concepts Ledger Accounts for Manufacturing Differences between

### MANAGERIAL ACCOUNTING SPRING 2014 MIDTERM EXAM. PROBLEM 1 Kennedy Company reports the following costs and expenses in May.

PROBLEM 1 Kennedy Company reports the following costs and expenses in May. Factory utilities \$ 13,500 Direct labor \$79,100 Depreciation on factory Sales salaries 48,400 equipment 12,650 Property taxes

### TYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR

18-11 C 2 Cost TYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR Cost Activity Activity Cost Cost behavior refers to how a cost will react to changes in the level of business activity. Total fixed

### 2 Cost Concepts and Behavior

2 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An expense is

### COST C O S T COST 1/12/2011

Chapter 3 COST CONCEPT AND DESIGN ECONOMICS C O S T Ir. Haery Sihombing/IP Pensyarah Fakulti Kejuruteraan Pembuatan Universiti Teknologi Malaysia Melaka COST Cost is not a simple concept. It is important