Work4Me Managerial Accounting Simulations. Problem Four

Transcription

1 Work4Me Managerial Accounting Simulations 1 st Web-Based Edition Problem Four Process Costing Patterson Tooling Company Page 1

2 INTRODUCTION Patterson Tooling Company manufactures a single product. The product requires the machine cutting of raw material into various specified parts, assembling the various parts into a single finished product, and packaging the finished product. You will enter transactions involving (1) the purchase and transfer of raw materials to the workin-process inventory of sequential production departments, (2) record the cost of labor and manufacturing overhead in two sequential production departments, (3) record the transfers-in and the transfers-out for two sequential production departments, using the weighted-average method of determining the equivalent units of production, (4) record the transfer of finished goods from the last production department to finished goods inventory, and (5) record the sales of finished goods. Normal costing is used. Under normal costing, direct materials and direct labor are applied to production departments at actual amounts and manufacturing overhead is applied at a predetermined rate. Patterson Tooling applies predetermined overhead at two different rates - of 120% of direct-labor cost to the Cutting Department and 80% of direct-labor cost to the Assembly Department to Manufacturing Overhead. Under- or over-applied manufacturing overhead will occur. For this problem, the Chart of Accounts is limited to key accounts related to this problem. CHART OF ACCOUNTS ASSETS 101 Cash 115 Finished-Goods Inventory 117 Raw-Material Inventory 119 Work-in-Process Cutting Department 121 Work-in-Process Assembling and Packaging Department 131 Factory Equipment 132 Accum. Depreciation Factory Equipment 140 Factory 142 Accum. Depreciation Factory LIABILITIES 201 Accounts Payable 205 Wages Payable 210 Short-Term Notes Payable 240 Mortgage Note Payable Page 2

3 STOCKHOLDER EQUITY ACCOUNTS 301 Common Stock 303 Preferred Stock 310 Retained Earnings 401 Sales REVENUE ACCOUNTS EXPENSE ACCOUNTS 501 Cost of Goods Sold 502 Manufacturing Overhead Cutting Department 505 Manufacturing Overhead Assem. & Packaging Dept 601 Selling Expenses 701 Administrative Expenses 901 Income Summary SUMMARY ACCOUNTS The beginning work-in-process inventory for each department is shown below: Beginning Work-In-Process Cutting Department Cost Item Physical Units Cost to Date Percent of Completion Direct material 5,000 $10, % Direct labor 26,000 80% Manufacturing overhead 9,200 80% Balance in process $45,200 Beginning Work-In-Process Assembly and Packaging Cost Item Physical Units Cost to Date Percent of Completion Direct material 1,000 $13, % Direct labor % Manufacturing overhead % Balance in process $14,406 Page 3

4 Before recording the transactions, you must first print a Trial Balance. 1. From the Menu Bar, select Problems 2. Select Problem 4 Process Costing 3. From the Menu Bar, select Journals/Ledgers/Statements 4. Select General Ledger 5. Print the Trial Balance ($566,606) 6. Select Journals/Ledgers/Statements 7. Select Chart of Accounts 8. Print the Chart of Accounts 9. Select Data Entry 10. Follow the directions given It is good practice to use the chart of accounts as a guide and write the journal entries in the right-hand margin of this manual where the information given for each transaction. This notation will reduce the amount of time you spend at the computer. ************************ RECORD THE MONTHLY TRANSACTIONS In the Date column, enter each transaction as TRAN 01, TRAN 02, etc. Transaction 01: Purchase raw materials Ten thousand units of raw material were purchased on account for $20,000. Record the purchase of the raw materials. At the Invoice prompt type PURRM. Transaction 02: Transfer raw materials to a production department Record the transfer of 15,000 units of raw materials, at $2 per unit, to the Cutting Department. Invoice Number: DMCUT. Transaction 03: Accrue labor costs Record the accrued direct labor for the Cutting Department. The accumulated total for direct labor time tickets is $66,000. Invoice Number: LBCUT. Page 4

5 Transactions continued Student Analysis Transaction 04: Record the manufacturing overhead for a production department Record the manufacturing overhead for the cutting department. Manufacturing overhead is $80,100, consisting of accumulated depreciation on factory equipment of $12,000, accumulated depreciation on factory of $8,000, cash expenditures of $60,100 (Check 10610). Invoice Number: MOCUT. Transaction 05: Record the application of manufacturing overhead to a production department The cutting department s manufacturing overhead is applied to the department s work in process at 120% of direct labor cost (see Tran 03). Invoice Number: MOHAP. Transaction 06: Record the transfer of units to another production department Fourteen thousand (14,000) units were completed and transferred out of the Cutting Department. Ending work in process consists of 6,000 units that are 100% complete as to direct material and 40% complete as to conversion costs. Complete the schedules on the following page using the Beginning Work-in-Process information provide on Page 3 and the journal entries for Transactions 1 to 5. Compute the weighted-average equivalent units of production, and the cost per equivalent unit. Page 5

6 Units To Be Accounted For and Units Accounted For: Physical Units Work in process, beginning 5,000 Units started into production Total units to account for Units completed and transferred 14,000 Work in process, ending 6,000 Total units accounted for Equivalent Units: Physical Units Percent Completed as to Conversion Units completed and transferred 14,000 Work in process, ending 6,000 40% Total units accounted for Equivalent Units Direct Material Conversion Total Costs to Account For: Direct Conversion Total Material Work in process, beginning $10,000 $35,200 $45,200 Costs incurred during the month Total costs to account for Cost per Equivalent Unit: Equivalent units Costs per equivalent unit Materials Conversion Total Record the transfers out to the Assembly and Packaging Department. Invoice Number: TRCUT. Page 6

7 Check Point: Now that you have completed entering the first twenty-four transactions, it is time to check the accuracy of your work. A. Move the pointer to Journals/Ledgers/Statements, select General Ledger, then Print the Trial Balance. B. Move the pointer to Check Figures and click. C. Print the Check Figures for Problem 4 Process Costing Transaction: 6. D. Check your account balances against the correct totals shown in the Check Figures E. If you have any incorrect check figures, see Correcting Journal Entries at the end of this Manual. F. If your check figures are correct, continue recording Transactions 7 to 15.. ************************ Transactions continued Student Analysis Transaction 07: Transfer raw materials to a production department Record the transfer of the 14,000 units of packaging material, at $.30 per unit, from the raw materials warehouse to the Assembly and Packaging Department. Invoice Number: DMAPD. Transaction 08: Accrue labor costs Record the accrued direct labor for the Assembly and Packaging Department. The accumulated total for direct labor time tickets is $22,500. Invoice Number: LBAPD. Page 7

8 Transactions continued Transaction 09: Record the manufacturing overhead for a production department Record the manufacturing overhead for the Assembly and Packaging Department. Manufacturing overhead is $17,600, consisting of accumulated depreciation on factory equipment of $2,000, accumulated depreciation on factory of $1,000, cash expenditures of $14,600 (Check 10611). Invoice Number: MOAPD. Student Analysis Transaction 10: Record the application of manufacturing overhead to a production department The Assembly and Packaging Department s manufacturing overhead is applied to the department s work in process at 80% of direct labor cost. Invoice Number: MOHAP. Transaction 11: Record the transfer of units to another production department. Thirteen thousand units (13,000) were completed and transferred out of the Assembly and Packaging Department. Ending work in process consists of 2,000 units that are 100% complete as to material and 60% complete as to conversion costs. Complete the schedules on the following page using the Beginning Work-in- Process information provided on Page 3 and journal entries for Transactions 7 to 10. Compute the weighted-average equivalent units of production and the cost per equivalent unit. Page 8

9 Units To Be Accounted For and Units Accounted For: Physical Units Work in process, beginning 1,000 Units started into production Total units to account for Units completed and transferred Work in process, ending 2,000 Total units accounted for Equivalent Units: Physical Units Percent Completed as to Conversion Units completed and transferred 13,000 Work in process, ending 2,000 60% Total units accounted for Equivalent Units Direct Material Conversion Total Costs to Account For: Direct Conversion Total Material Work in process, beginning $13,300 $1,106 $14,406 Costs incurred during the month Total costs to account for Cost per Equivalent Unit: Equivalent units Costs per equivalent unit Materials Conversion Total Record the transfers out of the Assembly and Packaging Department to Finished Goods. Invoice Number: TRNFG. Page 9

10 Transactions continued Student Analysis Transaction 12: Record sales Record the cash sales of 12,000 units at $25 per unit. Invoice Number: SALES. Transaction 13: Record the cost of goods sold Record the cost of goods sold. One thousand units of finished goods inventory with a cost value of $15.00 per unit and 11,000 units of recently completed finished goods were sold. Invoice Number: CGSS1. Transaction 14: Record selling and administrative expenses Record selling expenses of $12,000 and administrative expenses of $36,000 in a compound entry. All of the expenses were paid in cash (Check 10612). Invoice Number: GNEXP. Transaction 15: Close the over- or under-applied manufacturing overhead accounts Print a trial balance. On the basis of the Trial Balance, close the over- or under-applied manufacturing overhead accounts to the Cost of Goods Sold account. Invoice Number: CLOVH. ************************ This concludes the transactions for Problem 4 Process Costing. ************************ Page 10

11 A. Move the pointer to Journals/Ledgers/Statements, select General Ledger, then Print the Trial Balance. B. Move the pointer to Check Figures and click. C. Print the Check Figures for Problem 4 Job-Order Costing Transaction: 15 D. Check your account balances against the correct totals shown in the Check Figures E. If you have any incorrect check figures, see Correcting Journal Entries at the end of this Manual. ************************ If your account balances are in agreement, do the following: 1. Print the following ledger accounts: 101, 115, 117, 119, 121, and 502 a. Click on Journals/Ledgers/Statements. b. Click on General Ledger. c. Click on Ledger Card, and Print the Cash account. d. Click on Ledger Card and select account 115 from the drop-down list. e. Click on Show Ledger Card and Print the account 115. f. Continue with steps (d) and (e) and Print accounts 117, 119, 121, and Print the General Journal a. Click on Journals/Ledgers/Statements. b. Click on General Journal. c. Print the General Journal. 3. Answer the Examination Questions on Problem 4 Process Costing on the next page. Page 11

12 MANAGERIAL WORK4ME PROBLEM 4 PROCESS COSTING NAME CLASS DAY AND TIME DATE 1. What is the balance of Cost of Goods Sold account after closing the department manufacturing overhead accounts? A. $365,530 B. $368,030 C. $367,130 D. None of the above. 2. What was the cost per equivalent unit for conversion costs in the Assembly and Packaging Department? A. $16.23 B. $11.00 C. $2.93 D. $ What was the cost per equivalent unit for direct materials in the Cutting Department? A. $11.00 B. $13.30 C. $2.93 D. $ What is the cost per equivalent unit for direct material costs in the Assembly and Packaging Department? A. $13.30 B. $2.00 C. $2.93 D. $ What is equivalent unit cost for units transferred from the Assembly and Packaging Department to Finished Goods? A. $13.30 B. $13.00 C. $16.23 D. $ What was net increase in the unit cost of finished goods between the previous period and the current period? (See Transaction 12). A. $3.23 B. $1.23 C. $2.45 D. $1.36 Page 12

13 MANAGERIAL WORK4ME PROBLEM 4 7. Prior to closing the manufacturing overhead accounts, was the balance in Cutting Department manufacturing overhead account an overapplied or underapplied balance? A. Overapplied balance B. Underapplied balance 8. Refer to your printed Trial Balance. What was the net operating income for the period? A. $202,470 B. $568,000 C. $116,970 D. $68, Refer to your printed Trial Balance. What was operating income as a percent of sales? % 10. How many units are in the Finished-Goods Inventory? Correcting Journal Entries 1. Move the pointer to Journals/Ledgers/Statements, select General Journal then Print the journal. 2. Find journal entries errors by comparing the journal entries to the transactions shown in the Manual. 2. Reverse every incorrect entry using the original Transaction Number. 3. Record the transaction(s) correctly, using the original Transaction Number. 4. Print the Trial Balance 5. Move the pointer to Check Figures and click. 6. Print the Check Figures. 7. Verify for correct balances. 8. If incorrect balances exist, repeat Steps 1 to 7. Page 13