The following information is taken from the accounts of Foster Corp. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead (a) 428,000 (b) 470,000 42,000 Bal. Work in Progress 117,000 (c) Bal. 820,000 222,000 127,000 (b) 470,000 Bal. 116,000 Finished Goods Bal. 178,000 (d) 874,000 (c) 820,000 Bal. 124,000 Cost of Goods Sold (d) 874,000 The overhead applied to production during the year is distributed among the ending balances in the accounts as follows: Work in Process, ending $ 47,000 Finished Goods, ending 70,500 Cost of Goods Sold 352,500 Overhead applied $470,000

The following information is taken from the accounts of Foster Corp. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead (a) 428,000 (b) 470,000 42,000 Bal. Work in Progress 117,000 (c) Bal. 820,000 222,000 127,000 (b) 470,000 Bal. 116,000 Finished Goods Bal. 178,000 (d) 874,000 (c) 820,000 Bal. 124,000 Cost of Goods Sold (d) 874,000 The overhead applied to production during the year is distributed among the ending balances in the accounts as follows: Work in Process, ending $ 47,000 Finished Goods, ending 70,500 Cost of Goods Sold 352,500 Overhead applied $470,000

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter4: Job-order Costing And Overhead Application

Section: Chapter Questions

Problem 62P: (Appendix 4A) Overhead Application, Journal Entries, Job Cost At the beginning of the year, Smith...

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(Appendix 4A) Overhead Application, Journal Entries, Job Cost At the beginning of the year, Smith Company budgeted overhead of 129,600 as well as 13,500 direct labor hours. During the year, Job K456 was completed with the following information: direct materials cost, 2,750; direct labor cost, 5,355. The average wage for Smith Company employees is 17 per hour. By the end of the year, 18,100 direct labor hours had actually been worked, and Smith incurred the following actual overhead costs for the year: Required: 1. Calculate the overhead rate for the year. 2. Calculate the total cost of Job K456. 3. Prepare the journal entries to record actual overhead and to apply overhead to production for the year. 4. Is overhead overapplied or underapplied? By how much? 5. Assuming that the normal cost of goods sold for the year is 635,600, what is the adjusted cost of goods sold?
Factory overhead rate Salvo Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead race is now 1,500 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has started the following: Our accounting system doesnt make any sense to me. It tells me that every labor hour carries an additional burden of 1,500. This means that direct labor makes up only 6% of our total product cost yet it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I wont be surprised if next year the rate is 2,000 per direct labor hour. Im also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30-minute error in our estimate of assembly time is worth 750. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. 1. What is the engineers concern about the overhead rate going up and up? 2. What did the engineer mean about the large overhead rate being a disadvantage when placing bids and seeking new business? 3. What do you think is a possible solution?
(Appendix 4A) Journal Entries, T-Accounts Lowder Inc. builds custom conveyor systems for warehouses and distribution centers. During the month of July, the following occurred: a. Purchased materials on account for 42,630. b. Requisitioned materials totaling 27,000 for use in production: 12,500 for Job 703 and the remainder for Job 704. c. Recorded direct labor payroll for the month of 26,320 with an average wage of 14 per hour. Job 703 required 780 direct labor hours; Job 704 required 1,100 direct labor hours. d. Incurred and paid actual overhead of 19,950. e. Charged overhead to production at the rate of 10 per direct labor hour. f. Completed Job 703 and transferred it to Finished Goods. g. Kept Job 704, which was started during July, in process at the end of the month. h. Sold Job 700, which had been completed in May, on account for cost plus 30%. Beginning balances as of July 1 were: Required: 1. Prepare the journal entries for transactions a through e. 2. Prepare simple job-order cost sheets for Jobs 703 and 704. 3. Prepare the journal entries for transactions f and h. 4. Calculate the ending balances of the following: (a) Raw Materials, (b) Work in Process, and (c) Finished Goods.
QUESTION 46 A company has $10,000 under-applied overhead at the end of a given period. The following information is given: Account Ending balance Overhead applied in the accountWork-in-process $95,000 $30,000 Finished goods $85,000 $10,000 Cost of goods sold $120,000 $60,000 Manufacturing overhead control $110,000 Applied manufacturing overhead $100,000 The company uses the proration method to allocate the under-applied overhead to the above accounts. The accounting treatment to dispose of the under-applied overhead does which of the following? A. Decrease (credit) Cost of goods sold by $10,000 B. Increase (dedit) Cost of goods sold by $4,000 C. Increase (debit)…
Problem 7-47 (Algo) Estimate Machine-Hours Worked from Overhead Data (LO 7-3) Melbourne Company estimated that machine-hours for the year would be 39,100 hours and overhead (all fixed) would be $144,670. Melbourne applies its overhead on the basis of machine-hours. During the year, all overhead costs were exactly as planned ($144,670). There was $22,200 in overapplied overhead. Required: How many machine-hours were worked during the period? (Do not round intermediate calculations.)
Exercise 5-4. APPLIED FACTORY OVERHEAD During the month of July, the company worked on four orders, three of which were completed. Costs and other pertinent data in connection with these orders are: Job 701 Job 702 Job 703 Job 704 Direct materials P 30,000 P 52,500 P 45,300 P 22,600 Direct labor P 85,100 P 58,400 P 42,500 P 28,600 Direct labor hours 50,000 45,000 15,000 12,000 There was no beginning work in process in July. The company applies factory overhead to production at the rate of 90% of direct labor cost. Actual overhead for the month amounted to P186,720. Jobs 701, 702, and 703 were completed. Jobs 701 and 702 were delivered and the customers billed in the amounts of P210,700 and P180,200 respectively. REQUIRED: Entries in general journal form…
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Exercise 15-26 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $960,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $969,300 and actual direct materials costs for the year are $400,000. 1. Determine the predetermined overhead rate using estimated direct materials costs2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year.3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.
QuestionQ# 1: Accounting for Manufacturing Concern The following data from the just completed year are taken from the accounting records of KentonCompany:Sales $ 975,000Direct labor cost $ 165,000Raw material purchases $ 229,000Selling expense $ 48,750Administrative expenses $ 146,250Manufacturing overhead applied to work in process $ 180,000Actual manufacturing overhead costs $ 175,050Inventories: Beginning EndingRaw materials $ 18,000 $ 17,500Work in process $ 20,000 $ 14,750Finished goods $ 9,000 $ 11,000Required:1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in productionwere direct materials.2. Prepare a schedule of cost of goods sold. Assume that the company’s underapplied or overappliedoverhead is closed to Cost of Goods Sold.3. Prepare an income statement
6.Disposition of Over- or Underapplied Overhead. The following information is available concerning theinventory and cost of goods sold accounts of PGA Company at the end of the most recent year:Work in Finished Cost of GoodsProcess Goods SoldDirect material .............................................................................. $ 5,000 $ 8,000 $ 11,000Direct labor ................................................................................... 6,000 15,000 15,000Applied overhead ......................................................................... 4,000 12,000 24,000Year-end balance.......................................................................... $ 15,000 $ 35,000 $ 50,000Applied overhead has already been closed to Factory Overhead Control.Required:Give the journal entry required to close Factory Overhead Control, assuming:(1) Overapplied overhead of $10,000 is to be allocated to inventories and Cost of Goods Sold in proportionto the balances in those…
un.3 The following information pertains to Flaxman Manufacturing Company for April. Assume actual overhead equaled applied overhead. April 1 Inventory balances Raw materials $ 124,400 Work in process 118,700 Finished goods 77,600 April 30 Inventory balances Raw materials $ 86,600 Work in process 145,700 Finished goods 80,300 During April Costs of raw materials purchased $ 118,800 Costs of direct labor 101,300 Costs of manufacturing overhead 61,800 Sales revenues 355,000 Required Prepare a schedule of cost of goods manufactured and sold. Calculate the amount of gross margin on the income
Problem 3-11 (Algo) T-Account Analysis of Cost Flows [LO3-2, LO3-3, LO3-4] Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Bal. 1/1 35,000 Credits ? Debits 160,000 Bal. 12/31 45,000 Manufacturing Overhead Debits 188,400 Credits ? Work in Process Bal. 1/1 40,000 Credits 530,000 Direct materials 110,000 Direct labor 210,000 Overhead 218,400 Bal. 12/31 ? Factory Wages Payable Debits 225,000 Bal. 1/1 19,000 Credits 220,000 Bal. 12/31 14,000 Finished Goods Bal. 1/1 60,000 Credits ? Debits ? Bal. 12/31 90,000 Cost of Goods Sold Debits ? Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of…