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All Textbook Solutions for Principles of Cost Accounting
How does the cost accounting function assist in the management of a business?2Q3Q4Q5Q6QHow is cost accounting information used by management?Why is unit cost information important to management?For a manufacturer, what does the planning process involve, and how is cost accounting information used in planning?How is effective control achieved in a manufacturing concern?Define responsibility accounting.What criteria must be met for a unit of activity within the factory to qualify as a cost center?13Q14QWhat actions should a CMA take when the established policies of the organization do not resolve an ethical conflict? (Appendix)16Q17Q18QHow is cost accounting related to: financial accounting? managerial accounting?How does the computation of cost of goods sold for a manufacturer differ from that of a merchandiser?How would you describe the following accounts: Finished Goods, Work in Process, and Materials?22QWhat is the difference between a perpetual inventory system and a periodic inventory system?What are the basic elements of production cost?How would you define the following costs: direct materials, indirect materials, direct labor, indirect labor, and factory overhead?Why have companies such as Harley-Davidson stopped tracking direct labor cost as a separate cost category?Distinguish prime cost from conversion cost. Does prime cost plus conversion cost equal the total manufacturing cost?In what way does the accounting treatment of factory overhead differ from that of direct materials and direct labor costs?How do cost of goods sold and cost of goods manufactured differ for a manufacturer?How are nonfactory costs and costs that benefit both factory and nonfactory operations accounted for?What is a mark-on percentage?32QWhen is process costing appropriate, and what types of businesses use it?What are the advantages of accumulating costs by departments or jobs rather than for the factory as a whole?What is a job cost sheet, and why is it useful?What are standard costs, and what is the purpose of a standard cost system?If the factory operations and selling and administrative offices are housed in the same building, what would be a good cost allocation basis to use in dividing the depreciation expense between the two areas? Why would it be important to make this allocation?Study the performance report for Barbaras Bistro in Figure 1-2 of the chapter and write a brief explanation of the strengths and weaknesses of September and year-to-date operations.Note that Barbaras Bistro in Figure 1-2 prepares monthly performance reports. Do you think that it would be a good idea for Barbara to switch to just an annual performance report in an effort to reduce its accounting costs?Cost of goods soldmerchandiser The following data were taken from the general ledger of Owens Booksellers on January 31, the end of the first month of operations in the current fiscal year: Compute the cost of goods sold for the month of January.The following data were taken from the general ledger and other data of McDonough Manufacturing on July 31: Compute the cost of goods sold for the month of July.5EExplain in narrative form the flow of direct materials, direct labor, and factory overhead costs through the ledger accounts.The following data are taken from the general ledger and other records of Coral Park Production Co. on January 31, the end of the first month of operations in the current fiscal year: a. Prepare a statement of cost of goods manufactured. b. Prepare the cost of goods sold section of the income statement.The following data are taken from the general ledger and other records of Phoenix Products Co. on October 31, the end of the first month of operations in the current fiscal year: a. Prepare a statement of cost of goods manufactured. b. Prepare the cost of goods sold section of the income statement.The following inventory data relate to Edwards, Inc.: Calculate the following for the year: a. Direct materials purchased. b. Direct labor costs incurred. c. Cost of goods sold. d. Gross profit.The following is a list of manufacturing costs incurred by Denney Manufacturing Co. during July: Prepare the journal entries to: a. Charge the cost of materials to Work in Process and Factory Overhead. b. Charge the cost of labor to Work in Process and Factory Overhead. c. Record Factory Overhead costs. d. Record the transfer of Factory Overhead to Work in Process.Leen Production Co. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of May: a. Compute the total production cost of each job. b. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. c. Compute the selling price per unit for each job, assuming a mark-on percentage of 40%. d. Prepare the journal entries to record the sale of Job 1065.Gerken Fabrication Inc. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of March: a. Compute the total production cost of each job. b. Prepare the journal entries to charge the costs of materials, labor, and factory overhead to Work in Process. c. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. d. Compute the unit cost of each job. e. Compute the selling price per unit for each job, assuming a mark-on percentage of 50%.Cycle Specialists manufactures goods on a job order basis. During the month of June, three jobs were started in process. (There was no work in process at the beginning of the month.) Jobs Sprinters and Trekkers were completed and sold, on account, during the month (selling prices: Sprinters, 22,000; Trekkers, 27,000); Job Roadsters was still in process at the end of June. The following data came from the job cost sheets for each job. The factory overhead includes a total of 1,200 of indirect materials and 900 of indirect labor. Prepare journal entries to record the following: a. Materials used. b. Factory wages and salaries earned. c. Factory Overhead transferred to Work in Process d. Jobs completed. e. Jobs sold.Prepare a performance report for the dining room of Barbaras Bistro for the month of February 2016, using the following data:The following data were taken from the general ledgers and other sources of Gamma Manufacturing Inc. and Epsilon Merchandising Co. on April 30 of the current year: Required: 1. Compute the cost of goods sold for Epsilon Merchandising Co., selecting the appropriate items from the previous list. 2. Compute the cost of goods sold for Gamma Manufacturing Inc., selecting the appropriate items from the previous list.The following data were taken from the general ledgers and other sources of Clark Manufacturing Inc. and Samuel Merchandising Co. on September 30 of the current year: Required: 1. Compute the cost of goods sold for Samuel Merchandising Co., selecting the appropriate items from the previous list. 2. Compute the cost of goods sold for Clark Manufacturing Inc., selecting the appropriate items from the previous list.Statement of cost of goods manufactured; income statement; balance sheet The adjusted trial balance for Rochester Electronics, Inc. on November 30, the end of its first month of operation, is as follows: The general ledger reveals the following additional data: a. There were no beginning inventories. b. Materials purchases during the period were 33,000. c. Direct labor cost was 18,500. d. Factory overhead costs were as follows: Required: 1. Prepare a statement of cost of goods manufactured for the month of November. 2. Prepare an income statement for the month of November. (Hint: Check to be sure that your figure for Cost of Goods Sold equals the amount given in the trial balance.) 3. Prepare a balance sheet as of November 30. (Hint: Do not forget Retained Earnings.)The adjusted trial balance for Appleton Appliances, Ltd. on June 30, the end of its first month of operation, is as follows: The general ledger reveals the following additional data: a. There were no beginning inventories. b. Materials purchases during the period were 23,000. c. Direct labor cost was 18,500. d. Factory overhead costs were as follows: Required: 1. Prepare a statement of cost of goods manufactured for June. 2. Prepare an income statement for June. (Hint: Check to be sure that your figure for Cost of Goods Sold equals the amount given in the trial balance.) 3. Prepare a balance sheet as of June 30. (Hint: Do not forget Retained Earnings.)The post-closing trial balance of Custer Products, Inc. on April 30 is reproduced as follows: During May, the following transactions took place: a. Purchased raw materials at a cost of 45,000 and general factory supplies at a cost of 13,000 on account (recorded materials and supplies in the materials account). b. Issued raw materials to be used in production, costing 47,000, and miscellaneous factory supplies costing 15,000. c. Recorded the payroll and the payments to employees as follows: factory wages (including 12,000 indirect labor), 41,000; and selling and administrative salaries, 7,000. Additional account titles include Wages Payable and Payroll. (Ignore payroll withholdings and deductions.) d. Distributed the payroll in (c). e. Recognized depreciation for the month at an annual rate of 5% on the building, 10% on the factory equipment, and 20% on the office equipment. The sales and administrative staff uses approximately one-fifth of the building for its offices. f. Incurred other expenses totaling 11,000. One-fourth of this amount is allocable to the office function. g. Transferred total factory overhead costs to Work in Process. h. Completed and transferred goods with a total cost of 91,000 to the finished goods storeroom. i. Sold goods costing 188,000 for 362,000. (Assume that all sales were made on account.) j. Collected accounts receivable in the amount of 345,000. k. Paid accounts payable totaling 158,000. Required: 1. Prepare journal entries to record the transactions. 2. Set up T-accounts. Post the beginning trial balance and the journal entries prepared in (1) to the accounts and determine the balances in the accounts on May 31. 3. Prepare a statement of cost of goods manufactured, an income statement, and a balance sheet. (Round amounts to the nearest whole dollar.)Selected account balances and transactions of Titan Foundry Inc. follow: May Transactions: a. Purchased raw materials and factory supplies on account at costs of 45,000 and 10,000, respectively. (One inventory account is maintained.) b. Incurred wages during the month of 65,000 (15,000 was for indirect labor). c. Incurred factory overhead costs in the amount of 42,000 on account. d. Made adjusting entries to record 10,000 of factory overhead for items such as depreciation (credit Various Credits). Factory overhead was closed to Work in Process. Completed jobs were transferred to Finished Goods, and the cost of jobs sold was charged to Cost of Goods Sold. Required: Prepare journal entries for the following: 1. The purchase of raw materials and factory supplies. 2. The issuance of raw materials and supplies into production. (Hint: Be certain to consider the beginning and ending balances of raw materials and supplies as well as the amount of the purchases.) 3. The recording of the payroll. 4. The distribution of the payroll. 5. The payment of the payroll. 6. The recording of factory overhead incurred. 7. The adjusting entry for factory overhead. 8. The entry to transfer factory overhead costs to Work in Process. 9. The entry to transfer the cost of completed work to Finished Goods. (Hint: Be sure to consider the beginning and ending balances of Work in Process as well as the manufacturing costs added to Work in Process this period.) 10. The entry to record the cost of goods sold. (Hint: Be sure to consider the beginning and ending balances of Finished Goods as well as the cost of the goods finished during the month.)OReilly Manufacturing Co.s cost of goods sold for the month ended July 31 was 345,000. The ending work in process inventory was 90% of the beginning work in process inventory. Factory overhead was 50% of the direct labor cost. No indirect materials were used during the period. Other information pertaining to OReillys inventories and production for July is as follows: Required: 1. Prepare a statement of cost of goods manufactured for the month of July. (Hint: Set up a statement of cost of goods manufactured, putting the given information in the appropriate spaces and solving for the unknown information. Start by using cost of goods sold to solve for the cost of goods manufactured.) 2. Prepare a schedule to compute the prime cost incurred during July. 3. Prepare a schedule to compute the conversion cost charged to Work in Process during July.Glasson Manufacturing Co. produces only one product. You have obtained the following information from the corporations books and records for the current year ended December 31, 2016: a. Total manufacturing cost during the year was 1,000,000, including direct materials, direct labor, and factory overhead. b. Cost of goods manufactured during the year was 970,000. c. Factory Overhead charged to Work in Process was 75% of direct labor cost and 27% of the total manufacturing cost. d. The beginning Work in Process inventory, on January 1, was 40% of the ending Work in Process inventory, on December 31. e. Material purchases were 400,000 and the ending balance in Materials inventory was 60,000. No indirect materials were used in production. Required: Prepare a statement of cost of goods manufactured for the year ended December 31 for Glasson Manufacturing. (Hint: Set up a statement of cost of goods manufactured, putting the given information in the appropriate spaces and solving for the unknown information.)Sultan, Inc. manufactures goods to special order and uses a job order cost system. During its first month of operations, the following selected transactions took place: Required: 1. Prepare a schedule reflecting the cost of each of the four jobs. 2. Prepare journal entries to record the transactions. 3. Compute the ending balance in Work in Process. 4. Compute the ending balance in Finished Goods.Spokane Production Co. obtained the following information from its records for July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for July: a. The gross profit or loss for each job completed and sold, and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)Bangor Products Co. obtained the following information from its records for April: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for April: a. The gross profit or loss for each job completed and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)Potomac Automotive Co. manufactures engines that are made only on customers orders and to their specifications. During January, the company worked on Jobs 007, 008, 009, and 010. The following figures summarize the cost records for the month: Jobs 007 and 008 have been completed and delivered to the customer at a total selling price of 426,000, on account. Job 009 is finished but has not yet been delivered. Job 010 is still in process. There were no materials or work in process inventories at the beginning of the month. Material purchases were 115,000, and there were no indirect materials used during the month. Required: 1. Prepare a summary showing the total cost of each job completed during the month or in process at the end of the month. 2. Prepare the summary journal entries for the month to record the distribution of materials, labor, and overhead costs. 3. Determine the cost of the inventories of completed engines and engines in process at the end of the month. 4. Prepare the journal entries to record the completion of the jobs and the sale of the jobs. 5. Prepare a statement of cost of goods manufactured.Required Ethics Mary Branson is the Division Controller and Robert Carson is the Division Vice President of Chandler Manufacturing Company. Due to pressures to meet earnings estimates for 2016, Carson instructs Branson to record as revenue 3,000,000 of orders for computers that are still in production and will not be shipped until January 2017. Required: a. Which of the standards within the IMAs Statement of Ethical Professional Practice should Branson consider in deciding her course of action in this matter? b. What should Branson do if Carson does not acquiesce and still insists that he record the revenue in 2016?What are the two major objectives of materials control?2QWhat factors should management consider when determining the amount of investment in materials?4QWhat kind of information and data are needed to calculate an order point?How would you define the term economic order quantity?What kind of information and data are needed to calculate the economic order quantity?What factors should be considered when determining the cost of placing an order?9Q10Q11QProper authorization is required before orders for new materials can be placed.What is the difference between a purchaserequisition and a purchase order?13Q14Q15Q16Q17QNormally, a manufacturer maintains an accounting system that includes a materials ledger and a general ledger account for Materials. What is the relationship between the materials ledger and the materials account in the general ledger?19QWhy do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on the income statement and balance sheet.21Q22Q23Q24Q25Q26Q27Q28QA manufacturing process may produce a considerable quantity of scrap material because of the nature of the product. What methods can be used to account for the sales value of scrap material?After a product is inspected, some units may be classified as spoiled and others as defective. What distinguishes a product as being spoiled or defective?Order Point Pershing, Inc. expects daily usage of 500 lb of material X, an anticipated lead time of seven days, and a desired safety stock of 2,500 lb. a. Determine the order point. b. Determine the number of pounds to be issued from safety stock if the new order is four days late.Economic order quantity; order cost; carrying cost Epworth Co. predicts that it will use 360,000 gallons of material during the year. It anticipates that it will cost 72 to place each order. The annual carrying cost is 4 per gallon. a. Determine the most economical order quantity by using the EOQ formula. b. Determine the annual order and carrying costs at the EOQ point.Economic order quantity; order cost; carrying cost Westbrook Co. predicts that it will use 225,000 gallons of material during the year. The material is expected to cost 10 per gallon. It anticipates that it will cost 40 to place each order. The annual carrying cost is 2 per gallon. a. Determine the most economical order quantity by using the EOQ formula. b. Determine the annual order and carrying costs at the EOQ point.Journalizing materials requisitions Penrose Manufacturing Inc. records the following use of materials during June: Prepare a summary journal entry for the materials requisitions.Recording materials transactions Prepare a journal entry to record each of the following materials transactions: a. Total materials purchased on account during the month amounted to 200,000. b. Direct materials requisitioned for the month totaled 175,000. c. Indirect materials requisitioned during the month totaled 12,000. d. Direct materials returned to the storeroom from the factory amounted to 2,500. e. Total materials returned to vendor during the month amounted to 1,800. f. Payment during the month for materials purchased on account totaled 165,000.PurrChems raw materials records contained the following information for the month of August: Determine the cost of materials issued into production and the cost of the August 31 inventory under each of the following costing methods (Round per unit amounts to three decimal places and total amounts to the nearest dollar.): 1. FIFO 2. LIFO 3. Weighted averageUsing first-in, first-out perpetual inventory costing and the following information, determine the cost of materials used and the cost of the July 31 inventory:LIFO costing Using last-in, first-out perpetual inventory costing and the information presented in E2-7, compute the cost of materials used and the cost of the July 31 inventory.Using the weighted average method of perpetual inventory costing and the information presented in E2-7, compute the cost of materials used and the cost of the July 31 inventory. (Round unit prices to four decimal places and totals to the nearest whole dollar.)10ERenfro, Inc. was franchised on January 1, 2016. At the end of its third year of operations, December 31, 2018, management requested a study to determine what effect different materials inventory costing methods would have had on its reported net income over the three-year period. The materials inventory account, using LIFO, FIFO, and weighted average, would have had the following ending balances: a. Assuming the same number of units in ending inventory at the end of each year, were material costs rising or falling from 2016 to 2018? b. Which costing method would show the highest net income for 2017? c. Which method would show the lowest net income for 2018? d. Which method would show the highest net income for the three years combined?Recording materials transactions Craig Products Co. maintains the following accounts in the general ledger: Materials, Work in Process, Factory Overhead, and Accounts Payable. On June 1, the materials account had a debit balance of 5,000. Following is a summary of materials transactions for the month of June: 1. Materials purchased, 23,750. 2. Direct materials requisitioned to production, 19,250. 3. Direct materials returned to storeroom, 1,200. 4. Indirect materials requisitioned to production, 2,975. 5. Indirect materials returned to storeroom, 385. a. Prepare journal entries to record the materials transactions. b. Post the journal entries to ledger accounts (in T-account form). c. What is the balance of the materials inventory account at the end of the month?Recording materials transactions Broadwell Manufacturing Co. maintains the following accounts in the general ledger: Materials, Work in Process, Factory Overhead,and Accounts Payable. On July 1, the materials account had adebit balance of 10,000. Following is a summary of materialstransactions for the month of July: 1. Materials purchased, 35,750. 2. Direct materials requisitioned to production, 29,250. 3. Direct materials returned to storeroom, 2,200. 4. Indirect materials requisitioned to production, 3,975. 5. Indirect materials returned to storeroom, 585. a. Prepare journal entries to record the materials transactions. b. Post the journal entries to ledger accounts (in T-accountform). c. What is the balance of the materials inventory account atthe end of the month?JIT and cost control Matsui Industries produces 5,000 units each day, and the average number of units in work in process is 25,000. 1. Determine the throughput time. 2. If the same daily output can be achieved while reducing the work in process by 50%, determine the new throughput time. 3. Assuming the above doubling of the velocity of production, an average annual carry cost of 15%, and an average work in process inventory of 500,000, determine (a) the current annual carrying cost and (b) the projected new annual carrying cost.Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 80,000. b. Requisitioned raw materials to production, 80,000. c. Distributed direct labor costs, 10,000. d. Factory overhead costs incurred, 60,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 225,000, on account.For E2-15, prepare any journal entries that would have been different if the only trigger points had been the purchase of materials and the sale of finished goods.Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)For E2-17, prepare any journal entries that would have been different if the only trigger points had been the purchase of materials and the sale of finished goods. Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular jobamounted to 600. At the point of final inspection, it was discoveredthat the material used was inferior to the specifications required bythe engineering department; therefore, all units had to be scrapped. Record the entries required for scrap under each of the following conditions: a. The revenue received for scrap is to be treated as a reductionin manufacturing cost but cannot be identified with a specificjob. The value of stainless steel scrap is stable and estimatedto be 125 for this job. The scrap is sold two months later forcash at the estimated value of 125. b. Revenue received for scrap is to be treated as a reduction inmanufacturing cost but cannot be identified with a specificjob. A firm price is not determinable for the scrap until it issold. It is sold eventually for 75 cash. c. The production job is a special job, and the 85 received onaccount for the scrap is to be treated as a reduction inmanufacturing cost. (A firm price is not determinable for thescrap until it is sold.) d. Only 40 cash was received for the scrap when it was sold inthe following fiscal period. (A firm price is not determinablefor the scrap until it is sold, and the amount to be received forthe scrap is to be treated as other income.)Spoiled work Roger Company manufactures tennis clothing. During the month, the company cut and assembled 8,000 skirts. One hundred of the skirts did not meet specifications and were considered seconds. Seconds are sold for 9.95 per skirt, whereas first-quality skirts sell for 39.95. During the month, Work in Process was charged 108,000: 36,000 for materials, 48,000 for labor, and 24,000 for factory overhead. Record the entries to first charge production costs for the period and to then record the loss due to spoiled work, under each of the following conditions: a. The loss due to spoiled work is spread over all jobs in the department. b. The loss due to spoiled work is charged to the specific job because it is a special order.Defective work Herbert Electronics manufactures an integrated transistor circuit board for repeat customers but also accepts special orders for the same product. Job No. JM4 incurred the following unit costs for 1,000 circuit boards manufactured: When the completed products were tested, 50 circuit boards were found to be defective. The costs per unit of correcting the defects follow: Record the journal entry for the costs to correct the defective work: a. If the cost of the defective work is charged to factory overhead. b. If the cost of the defective work is charged to the specific job.Perry Co. predicts it will use 25,000 units of material during the year. The expected daily usage is 200 units, and there is an expected lead time of five days and a desired safety stock of 500 units. The material is expected to cost 5 per unit. Perry anticipates it will cost 50 to place each order. The annual carrying cost is .10 per unit. Required: 1. Compute the order point. 2. Determine the most economical order quantity by use of the EOQ formula. 3. Calculate the total cost of ordering and carrying at the EOQ point.2PEconomic order quantity; tabular computation Lopez Chemical Inc. requires 20,000 gallons of material annually; the cost of placing an order is 20; the annual carrying cost per gallon is 5. Required: Determine the EOQ from potential order sizes of 300, 400, 500, 600, 700, and 800 gallons by constructing a table similar to the one appearing on pages 7374.In P2-3, assume that the company desires a safety stock of 500 gallons. Required: 1. Compute the average number of gallons in inventory. 2. Compute the total carrying cost. 3. Compute the total order cost. Did it differ from your answer in P2-3? Why?Inventory costing methods The purchases and issues of rubber gaskets (Materials Ledger #11216) as shown in the records of Hillsdale Corp. for November follow: Required: 1. Complete a materials ledger account similar to Figure 2-10 (the On Order columns should be omitted) for each of the following inventory costing methods, using a perpetual inventory system: a. FIFO b. LIFO c. Weighted average (carrying unit prices to five decimal places) 2. For each method, prepare a schedule that shows the total cost of materials transferred to Work in Process and the cost of the ending inventory. 3. If prices continue to increase, would you favor adopting the FIFO or the LIFO method? Explain. 4. When prices continue to rise, what is the effect of FIFO versus LIFO on the inventory balance for materials reported in the balance sheet? Discuss.Inventory costing methods The following transactions affecting materials occurred in February: Required: Record the transactions in materials ledger accounts similar to Figure 2-10. (The On Order columns should be omitted.) Use the following inventory methods, assuming the use of a perpetual inventory system. Carry unit prices to four decimal places. 1. FIFO 2. LIFO 3. Weighted averageTerrills Transmissions uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows: The following transactions were completed during November: a. Materials purchases on account during the month, 74,000. b. Materials requisitioned during the month: 1. Direct materials, 57,000. 2. Indirect materials, 11,000. c. Direct materials returned by factory to storeroom during the month, 1,100. d. Materials returned to vendors during the month prior to payment, 2,500. e. Payments to vendors during the month, 68,500. Required: 1. Prepare general journal entries for each of the transactions. 2. Post the general journal entries to T-accounts. 3. Balance the accounts and report the balances of November 30 for the following: a. Cash b. Materials c. Accounts Payable8PTuscany Products, Inc. uses a job order cost system. The following accounts have been taken from the books of the company: Required: 1. Analyze the accounts and describe in narrative form what transactions took place. (Use the reference letters a. through f. in your explanations and note that some accounts needed in your explanation have been purposely omitted.) 2. List the supporting documents or forms required to record each transaction involving the receipt or issuance of materials. 3. Determine the ending balances for Materials, Work in Process, and Finished Goods.10PJIT and cost control Langray, Ltd. produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost is 25% of inventory cost, and the cost of the average work in process is 1,000,000. Required: 1. Determine the throughput time. 2. Compute the annual carrying costs. 3. If the same daily output can be achieved while reducing the work in process by 50%, determine the new throughput time. 4. What has happened to the velocity of production in part 3? 5. Compute the annual carrying costs for part 3. 6. What was the impact of the action in part 3 on the carrying costs?Backflush costing Russell Corp. uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products. Required: 1. Prepare journal entries, if needed, to account for the following transactions. a. Purchased raw materials on account, 150,000. b. Requisitioned raw materials to production, 150,000. c. Distributed direct labor costs, 25,000. d. Incurred manufacturing overhead costs, 100,000. (Use Various Credits for the credit part of the entry.) e. Cost of products completed, 275,000. f. Completed products sold for 400,000, on account. 2. Prepare any journal entries that would be different from the above, if the only trigger points were the purchase of materials and the sale of finished goods.Webster Company uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products. Required: 1. Prepare journal entries, if needed, to account for the followingtransactions. a. Purchased raw materials on account, 135,000. b. Requisitioned raw materials to production, 135,000. c. Distributed direct labor costs, 20,000. d. Incurred manufacturing overhead costs, 80,000. (Use Various Credits for the credit part of the entry.) e. Cost of products completed, 235,000. f. Completed products sold for 355,000, on account. 2. Prepare any journal entries that would be different from theabove, if the only trigger points were the purchase of materialsand the sale of finished goods.An examination of Buckhorn Fabricators records reveals the following transactions: a. On December 31, the physical inventory of raw material was 9,950 gallons. The book quantity, using the weighted average method, was 10,000 gal @ .52 per gal. b. Production returned to the storeroom materials that cost 775. c. Materials valued at 770 were charged to Factory Overhead (Repairs and Maintenance), but should have been charged to Work in Process. d. Defective material, purchased on account, was returned to the vendor. The material returned cost 234. e. Goods sold to a customer, on account, for 5,000 (cost 2,500) were returned because of a misunderstanding of the quantity ordered. The customer stated that the goods returned were in excess of the quantity needed. f. Materials requisitioned totaled 22,300, of which 2,100 represented supplies used. g. Materials purchased on account totaled 25,500. Freight on the materials purchased was 185. h. Direct materials returned to the storeroom amounted to 950. i. Scrap materials sent to the storeroom were valued at an estimated selling price of 685 and treated as a reduction in the cost of all jobs worked on during the period. j. Spoiled work sent to the storeroom valued at a sales price of 60 had production costs of 200 already charged to it. The cost of the spoilage is to be charged to the specific job worked on during the period. k. The scrap materials in (i) were sold for 685 cash. Required: Record the entries for each transaction.One of the tennis rackets that Ace Sporting Goods manufactures is a titanium model (Slam) that sells for 149. The cost of each Slam consists of: Job 100 produced 100 Slams, of which six were spoiled and classified as seconds. Seconds are sold to discount stores for 50 each. Required: 1. Under the assumption that the loss from spoilage will be distributed to all jobs produced during the current period, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units. 2. Under the assumption that the loss due to spoilage will be charged to Job 100, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units.Lloyd Industries manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The followingcosts were determined for each motor: At final inspection, Lloyd discovered that 33 motors did not meet the exacting specifications established by the customer. Anexamination indicated that 18 motors were beyond repair andshould be sold as spoiled goods for 75 each. The remaining15 motors, though defective, could be reconditioned as first-qualityunits by the addition of 1,650 for materials, 1,500 for labor, and1,200 for factory overhead. Required: Prepare the journal entries to record the following: 1. The scrapping of the 18 motors, with the income from spoiledgoods treated as a reduction in the manufacturing cost of thespecific job. 2. The correction of the 15 defective motors, with the additionalcost charged to the specific job. 3. The additional cost of replacing the 18 spoiled motors with newmotors. 4. The sale of the spoiled motors for 75 each. 5. If the reconditioned motors sell for 400 each, is Lloyd betteroff reconditioning the defective motors or selling them as isfor 75 as spoiled goods?Review Problem for Chapters 1 and 2 UltraLift Corp. manufactures chain hoists. The raw materials inventories on hand on October 1 were as follows: The balances in the ledger accounts on October 1 were as follows: Transactions during October were as follows: a. Payroll recorded during the month: direct labor, 28,000; indirect labor, 4,800. b. Indirect materials purchased for cash, 1,000. c. Materials purchased on account: chain4,000 lb, 8,800; pulleys2,000 sets, 10,200; steel plates5,000 units, 3,000. d. Sales on account for the month, 126,375. e. Accounts receivable collected, 72,500. f. Materials used during October (FIFO costing): chain14,000 lb; pulleys4,400 sets; bolts and taps4,000 lb; steel plates3,800 units. g. Payroll paid, 32,800. h. Indirect materials issued to production in October, 650. i. Factory heat, light, and power costs for October, 3,000 (not yet paid). j. Office salaries paid, 6,000. k. Advertising paid, 2,000. l. Accounts payable paid, 33,750. m. Expired insuranceon office equipment, 100; on factory machinery, 300. n. Factory rent paid, 2,000. o. Depreciation on office equipment, 400; on office furniture, 180; on machinery, 1,200. p. Factory overhead charged to jobs, 11,950. q. Work in Process, October 31, 31,000. (Hint: The difference between the sum of the beginning balance in Work in Process plus the total charges to it during the period less the ending balance in Work in Process represents the cost of the goods completed during the period.) r. Cost of goods sold during the month, 84,250. Required: 1. Set up T-accounts and enter the balances as of October 1. 2. Prepare journal entries to record each of the previous transactions. 3. Post the journal entries to the accounts, setting up any new ledger accounts necessary. Only controlling accounts are to be maintained; however, show the calculation for the cost of materials used. 4. Prepare a statement of cost of goods manufactured for October. 5. Prepare an income statement. 6. Prepare a balance sheet showing the classifications of current assets, plant and equipment, current liabilities, and stockholders equity.Financial and Nonfinancial Aspects of Changing to JIT IntelliTalk manufactures smart phones. It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to 200,000 annually. Estimated benefits from the change to JIT are as follows: The quality advantages of JIT should reduce current rework cost of 300,000 by 25%. Materials storage, handling, and insurance costs of 250,000 would be reduced by an estimated 40%. Average inventory is expected to decline by 300,000 units, and the carrying cost per unit is .35. Required: 1. What is the estimated financial advantage or disadvantage of changing to a JIT system? 2. Are there any nonfinancial advantages or disadvantages of changing to a JIT system?2MCWhat is the difference between direct and indirect labor?2Q3QIn production work teams, output is dependent upon contributions made by all members of the work crew. If the number of pieces finished depends on a group effort, then a single incentive plan for the group may be appropriate.Define productivity.6Q7Q8Q9QWhat are the sources for posting direct labor cost to (a) individual jobs in the job cost ledger and (b) the work in process account in the general ledger?What are the sources for posting indirect labor cost to the indirect labor account in the factory overhead ledger?In accounting for labor costs, what is the distinction between the accounting treatment for regular pay and overtime premium pay?13Q14QBesides FICA, FUTA and state unemployment taxes, what items may an employer pay on behalf of its employees.16Q17Q18QWhat is a shift premium, and how is it usually accounted for?20Q21Q22Q23Q24Q25QR. Herbert of Crestview Manufacturing Co. is paid at the rate of 20 an hour for an eight-hour day, with time-and-a-half for overtime and double-time for Sundays and holidays. Regular employment is on the basis of 40 hours a week, five days a week. At the end of a week, the labor time record shows the following: Because jobs are randomly scheduled for the overtime period, any overtime premium is charged to Factory Overhead. a. Compute Herberts total earnings for the week. b. Present the journal entry to distribute Herberts total earnings. (Note: These single journal entries here and in E3-2, E3-3, E3-4, E3-8 and E3-9 are for the purpose of illustrating the principle involved. Normally, the entries would be made for the total factory payroll plus the administrative and sales payroll.)Recording payroll Using the earnings data developed in E3-1 and assuming that this was the first week of employment for R. Herbert with Crestview Manufacturing Co., prepare the journal entries for the following: a. The weeks payroll. b. Payment of the payroll.3EPeggy Nolan earns 20 per hour for up to 300 units of production per day. If she produces more than 300 units per day, she will receive an additional piece rate of .5333 per unit. Assume that her hours worked and pieces finished for the week just ended were as follows: a. Determine Nolans earnings for each day and for the week. (Round piece-rate computations to the nearest whole dollar.) b. Prepare the journal entry to distribute the payroll, assuming that any make-up guarantees are charged to Factory Overhead.Overtime Allocation Arlin Fabrication Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Other factory costs for the month totaled 16,800. Factory over-head costs are allocated one-third to Job 401 and two-thirds to Job 402. a. Describe two alternative methods for assigning the overtime premium cost to Jobs 401 and 402 and explain how the appropriate method would be determined. b. Compute the cost of Jobs 401 and 402 under each of the two methods described in part a.6EDavis, Inc. paid wages to its employees during the year as follows: a. How much of the total payroll is exempt from the FICA rate of 8%? b. How much of the total payroll is exempt from federal and state unemployment taxes? c. How much of the total payroll is exempt from federal income tax withholding?Recording the payroll and payroll taxes Using the earnings data developed in E3-1, and assuming that this was the 8th week of employment for Herbert and the previous earnings to date were 7,900, prepare the journal entries for the following: a. The weeks payroll. b. Payment of the payroll. c. The employers payroll taxes.9EThe total wages and salaries earned by all employees of Langen Electronics, Ltd. during March, as shown in the labor cost summary and the schedule of fixed administrative and sales salaries, are classified as follows: a. Prepare a journal entry to distribute the wages earned during March. b. What is the total amount of payroll taxes that will be imposed on the employer for the payroll, assuming that two administrative employees with combined earnings this period of 3,000 have exceeded 8,000 in earnings prior to the period?The total wages and salaries earned by all employees of James Industries during the month of February, as shown in the labor cost summary and the schedule of fixed administrative and sales salaries, are classified as follows: a. Prepare a journal entry to distribute the wages earned during February. b. What is the total amount of payroll taxes that will be imposed on the employer for the payroll, assuming that three administrative employees with combined earnings this period of 4,500 have exceeded 8,000 in earnings prior to the period?A weekly payroll summary made from labor time records shows the following data for Pima Company: Overtime is payable at one-and-a-half times the regular rate of pay and is distributed to all jobs worked on during the period. a. Determine the net pay of each employee. The income taxes withheld for each employee amount to 15% of the gross wages. b. Prepare journal entries for the following: 1. Recording the payroll. 2. Paying the payroll. 3. Distributing the payroll. (Assume that the overtime premium will be charged to all jobs worked on during the period.) 4. The employers payroll taxes. (Assume that none of the employees has achieved the maximum wage bases for FICA and unemployment taxes.)13EAccounting for bonus and vacation pay Cathy Muench a factory worker, earns 1,000 each week. In addition, she will receive a 4,000 bonus at year-end and a four-week paid vacation. Prepare the entry to record the weekly payroll and the costs and liabilities related to the bonus and the vacation pay, assuming that Muench is the only employee.15E16EPayroll computation with incentive bonus Fifteen workers are assigned to a group project. The production standard calls for 500 units to be completed each hour to meet a customers set deadline for the products. If the required units can be delivered before the target date on the order, the customer will pay a substantial premium for early delivery. The company, wishing to encourage the workers to produce beyond the established standard, has offered an excess-production bonus that will be added to each project employees pay. The bonus is to be computed as follows: a. Groupsexcessproductionoverstandard50%Standardunitsforweek=bonuspercentage b. Individuals hourly wage rate bonus percentage = hourly bonus rate c. Hourly wage rate + hourly bonus rate = new hourly rate for week d. Total hours worked new hourly rate = earnings for week The production record for the week shows the following: Required: 1. Determine the hourly bonus rate. (Round the bonus percentage to four decimal places and the bonus rate to the nearest whole cent.) 2. What are the total wages of L. Weitmarschen, who worked 40 hours at a base rate of 15 per hour? 3. What are the total wages of R. Emerson, who worked 35 hours at a base rate of 20 per hour?2P3PPayroll for piece-rate wage system Collier Manufacturing Co. operates on a modified wage plan. During one weeks operation, the following direct labor costs were incurred: The employees are machine operators. Piece rates vary with the kind of product being produced. A minimum of 70 per day is guaranteed to each employee by union contract. Required: 1. Compute the weekly earnings for Travis, Nessman, and Smithers. 2. Prepare journal entries to: a. record the weeks payroll, assuming that none of the employees has achieved the maximum base wage for FICA taxes. The income tax withheld for each employee amounts to 10% of gross wages. b. record payment of the payroll. c. record the employers share of payroll taxes, assuming that none of the employees has achieved the maximum base wage for FICA or unemployment taxes.A rush order was accepted by Bartley's Conversions for five van conversions. The labor time records for the week ended January 27 show the following (Hours not worked on vans are idle time andare not charged to the job.): All employees are paid 20 per hour, except Klembara, who receives 25 per hour. All overtime premium pay, except Klembara's, is chargeable to the job, and all employees, including Klembara, receive time-and-a-half for overtime hours. Required: 1. Calculate the total payroll and total net earnings for the week.Assume that an 18% deduction for federal income tax is requiredin addition to FICA deductions. Assume that none of the employees has achieved the maximums for FICA and unemploymenttaxes. 2. Prepare the journal entries to record and pay the payroll. 3. Prepare the journal entry to distribute the payroll to the appropriate accounts. 4. Determine the dollar amount of labor that is chargeable toeach van, assuming that the overtime costs are proportionateto the regular hours used on the vans. (First compute an average labor rate for each worker, including overtime premium,and then use that rate to charge all workers' hours to vans.)Round the labor rates to the nearest whole cent.The following form is used by Matsuto Manufacturing Co. to compute payroll taxes incurred during April: Required: 1. Using the above form, calculate the employers payroll taxes for April. Assume that none of the employees has achieved the maximums for FICA and unemployment taxes. 2. Assuming that the employer payroll taxes on factory wages are treated as factory overhead, the taxes covering administrative salaries are an administrative expense, and the taxes covering sales salaries are a selling expense, prepare a general journal entry to record the employer's liability for the April payroll taxes.Payment and distribution of payroll The general ledger of Berskshire Mountain Manufacturing Inc. showed the following credit balances on January 15: Direct labor earnings amounted to 10,500 from January 16 to 31. Indirect labor was 5,700, and sales and administrative salaries for the same period amounted to 3,800. All wages are subject to FICA, FUTA, state unemployment taxes, and 10% income tax withholding. Required: 1. Prepare the journal entries for the following: a. Recording the payroll. b. Paying the payroll. c. Recording the employers payroll tax liability. d. Distributing the payroll costs for January 1631. 2. Prepare the journal entry to record the payment of the amounts due for the month to the government for FICA and income tax withholdings. 3. Calculate the amount of total earnings for the period from January 1 to 15. 4. Should the same person be responsible for computing the payroll, paying the payroll and making the entry to distribute the payroll? Why or why not?8PAn analysis of the payroll for the month of November for CinMar Inc. reveals the information shown: All regular time Andrews, Lomax, and Herzog are production workers, and Dimmick is the plant manager. Hendrick is in charge of the office. Cumulative earnings paid (before deductions) in this calendar year prior to the payroll period ending November 8 were as follows: Andrews, 21,200; Lomax, 6,800; Herzog, 11,500; Dimmick, 116,200; and Hendrick, 32,800. The solution to this problem requires the following forms, using the indicated column headings: 1. Prepare an employee earnings record for each of the five employees. 2. Prepare a payroll record for each of the four weeks. 3. Prepare a labor cost summary for the month. 4. Prepare journal entries to record the following: a. The payroll for each of the four weeks. b. The payment of wages for each of the four payrolls. c. The distribution of the monthly labor costs per the labor cost summary. d. The company's payroll taxes covering the four payroll periods.10P11P12P13PUsing the information in P3-13, prepare the entries to 1) distribute the weekly payroll, and 2) record the costs and liabilities related to the bonus, vacation, and holiday pay, assuming that the fringe benefits of the direct laborers are charged to the individual jobs worked on during the period.Pan-Am Manufacturing Co. prepares cost estimates for projects on which it will bid. To anticipate the labor cost to be included in a request to bid on a contract for 1,200,000 units that will be delivered to the customer at the rate of 100,000 units per month, the company has compiled the following data related to labor: a. The first 100,000 units will require five hours per unit. b. The second 100,000 units will require less labor due to the skills learned on the first 100,000 units finished. It is expected that labor time will be reduced by 10% if an incentive bonus of one-half of the labor savings is paid to the employees. c. For the remaining 1,000,000 units, it is expected that the labor time will be reduced 20% from the original estimate (the first 100,000 units) if the same incentive bonus (1/2 of the savings) is paid to the employees. d. Overtime premiums are to be excluded when savings are computed. The contract will require 2,250 employees at a base rate of 20 per hour, with time-and-a-half for overtime. The plant operates on a five-day, 40-hour-per-week basis. Employees are paid for a two-week vacation in August and for eight holidays. The scheduled production for the 50-week work year shows: JanuaryJune: 26 weeks with four holidays JulyDecember: 24 weeks with four holidays Required: Prepare cost estimates for direct labor and labor-related costs for the contract, showing the following: 1. Wages paid at the regular rate. 2. Overtime premium payments based on the hours required to fulfill the contract and the current number of employees. (Dont forget holidays in computing regular hours available.) 3. Incentive bonus payments. 4. Vacation and holiday pay. 5. Employers payroll taxes based on all employee compensation over the contract term (13% of total wages, assuming that no employee has exceeded the wage bases for FICA and the unemployment insurance taxes).Incentive wage plan David Kelley is considering the implementation of an incentive wage plan to increase productivity in his small manufacturing plant. The plant is non-union, and employees have been compensated with only an hourly-rate plan. Julie Phelps, Vice President-Manufacturing, is concerned that the move to an incentive compensation plan will cause direct laborers to speed up production and, thus, compromise quality. Required: 1. How might Kelley accomplish his goals while alleviating Phelps concerns? 2. Does the compensation have to be all hourly rate or all incentive? 3. Can incentive compensation also apply to service businesses?Huron Manufacturing Co. uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and double-time for Saturday and Sunday. Also, a bonus of 1% of the employees earnings for the year is to be paid to the employees at the end of the fiscal year. The controller, the plant manager, and the sales manager disagree as to how the overtime pay and the bonus should be allocated. An examination of the first months payroll under the new union contract provisions shows the following: Analysis of the supporting payroll documents revealed the following: a. More production was scheduled each day than could be handled in a regular workday, resulting in the need for overtime. b. The Saturday and Sunday hours resulted from rush orders with special contract arrangements with the customers. The controller believes that the overtime premiums and the bonus should be charged to factory overhead and spread over all production of the accounting period, regardless of when the jobs were completed. The plant manager favors charging the overtime premiums directly to the jobs worked on during overtime hours and the bonus to administrative expense. The sales manager states that the overtime premiums and bonus are not factory costs chargeable to regular production but are costs created from administrative policies and, therefore, should be charged only to administrative expense. Required: 1. Evaluate each positionthe controllers, the plant managers, and the sales managers. If you disagree with all of the positions taken, present your view of the appropriate allocation. 2. Prepare the journal entries to illustrate the position you support, including the accrual for the bonus.What are factory overhead expenses, and what distinguishes them from other manufacturing costs? What other terms are used to describe factory overhead expenses?What are three categories of factory overhead expenses? Give examples of each.What are the distinguishing characteristics of variable, fixed, and semivariable factory overhead costs?When a products cost is composed of fixed and variable costs, what effect does the increase or decrease in production have on per unit cost?What effect does a change in volume have on total variable, fixed, and semivariable costs?Distinguish between a step-variable cost and a step-fixed cost.What is the basic premise underlying the high-low method of analyzing semivariable costs?What are the advantages and disadvantages of the scattergraph method as compared to the high-low method?Differentiate between an independent variable and a dependent variable and give an example of each.10QWhat is a flexible budget, and how can management use it?
How does accounting for factory overhead differ in small enterprises versus large enterprises?
What is the function and use of each of the two types of factory overhead analysis spreadsheets?What are two types of departments found in a factory? What is the function or purpose of each?What are the two most frequently used methods of distributing service department costs to production departments?When using the sequential distribution method of distributing service department costs, if a service department receives services from other service departments, will those costs be allocated back to it even though it was the first service department distributed?When using the sequential distribution method of distributing service department costs, if each of two service departments services the same number of other departments, how is it determined as to which service department to allocate first?Is it possible to close the total factory overhead to the individual producing departments with a single journal entry?What are the shortcomings of waiting until the actual factory overhead expenses are known before recording such costs on the job cost sheets?
What are the two types of budget data needed to compute predetermined overhead rates?
21QWhat factory operating conditions and data are required for each of the traditionally used methods for applying factory overhead to products? Discuss the strengths and weaknesses of each method.23QHow does activity-based costing differ from traditional methods of applying overhead to products?What steps must a company take to successfully employ activity-based costing?What is the relationship between activity-based costing and activity-based management?27Q28QIf the factory overhead control account has a credit balance of 2,000 at the end of the first month of the fiscal year, has the overhead been under- or overapplied for the month? What are some probable causes for the credit balance?30QClassify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that variable costs change in total as the volume of production changes.)
Indirect labor
Indirect materials
Insurance on building
Overtime premium pay
Depreciation of building (straight-line method)
Polishing compounds
Depreciation of machinery (units-of-production method)
Employer’s payroll taxes
Property taxes
Machine lubricants
Employees’ hospital insurance (paid by employer)
Labor for machine repairs
Vacation pay
Janitor’s wages
Rent
Small tools
Plant manager’s salary
Factory electricity
Product inspector’s wages
Ames Automotive Company has accumulated the following data over a six-month period:
Separate the indirect labor into its fixed and variable components, using the high-low method.
3EUsing the data in E4-2 and spreadsheet software, determine:
The variable cost per unit, the total fixed cost, and R2.
The plotted data points using the graphing function.
Compare the results to your solutions in E4-2 and E4-3 and explain the reasons for the results.
El Paso Products Company has accumulated the following data over a six-month period:
Separate the machine-related costs into their fixed and variable components, using the high-low method.
Computing unit costs at different levels of production
French Fragrances, Ltd. budgeted for 12,000 bottles of perfume Belle during May. The unit cost of Belle was $20, consisting of direct materials, $7; direct labor, $8; and factory overhead, $5 (fixed, $2; variable, $3).
What would be the unit cost if 10,000 bottles were manufactured? (Hint: You must first determine the total fixed costs.)
What would be the unit cost if 20,000 bottles were manufactured?
Explain why a difference occurs in the unit costs.
Identifying basis for distribution of service department costs
What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments?
Building maintenance
Inspection and packing
Machine repair
Human resources
Purchasing
Shipping
Raw materials storeroom
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.Compute the total job cost for each of the following scenarios: a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials used totaled 5,000 and that the direct labor cost totaled 3,200. b. If the direct labor hour method is used in applying factory overhead and the predetermined rate is 10 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, and the number of direct labor hours totaled 250. c. If the machine hour method is used in applying factory overhead and the predetermined rate is 12.50 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, the direct labor hours were 250 hours, and the machine hours were 295 hours.Classify each of the following items of factory overhead as a(n) unit-level, batch-level, product-level, or facility-level cost. a. Insurance on the building b. Depreciation of building (straight-line method) c. Depreciation of machinery (units-of-production method) d. Polishing compounds e. Machine lubricants f. Wages of forklift driver g. Building rent h. Plant managers salary i. Product inspectors wages j. Product design costsJob 25AX required 5,000 for direct materials, 2,000 for direct labor, 200 direct labor hours, 100 machine hours, two setups, and three design changes. The cost pools and overhead rates for each pool follow: Determine the cost of Job 25AX using the ABC method.Job 19AB required 10,000 for direct materials, 4,000 for direct labor, 300 direct labor hours, 150 machine hours, three material moves, and five component parts. The cost pools and overhead rates for each pool follow: Determine the cost of Job 19AB using the ABC method.Match each of the following cost pools with the most appropriate cost allocation base and determine the overhead rates, using each allocation base only once:The books of Petry Products Co. revealed that the following general journal entry had been made at the end of the current accounting period:
The total direct materials cost for the period was $40,000. The total direct labor cost, at an average rate of $10 per hour for direct labor, was one and one-half times the direct materials cost. Factory overhead was applied on the basis of $4 per direct labor hour. What was the total actual factory overhead incurred for the period? (Hint: First solve for direct labor cost and then for direct labor hours.)
The general ledger of Lawson Lumber Co. contains the following control account:
If the materials charged to the one uncompleted job still in process amounted to $3,400, what amount of labor and factory overhead must have been charged to the job if the factory overhead rate is 100% of direct labor cost? (Hint: First determine the balance in Work in Process.)
Nelson Fabrication Inc. had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following:
Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts.
Prepare the journal entry to close the credit balance in Under-and Overapplied Factory Overhead.
Housley Paints Co. had a remaining debit balance of $25,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following:
Determine the prorated amount of the underapplied factory overhead that is chargeable to each of the accounts.
Prepare the journal entry to close the debit balance in Under-and Overapplied Factory Overhead.
The cost behavior patterns below are lettered A through H. The vertical axes of the graphs represent total dollars of expense, and the horizontal axes represent production in units, machine hours, or direct labor hours. In each case, the zero point is at the intersection of the two axes. Each graph may be used no more than once. Required: Select the graph that matches the lettered cost described here. a. Depreciation of equipmentthe amount of depreciation charged is computed based on the number of machine hours that the equipment was operated. b. Electricity billflat fixed charge, plus a variable cost after a certain number of kilowatt hours are used. c. City water billcomputed as follows: d. Depreciation of equipmentthe amount is computed by the straight-line method. e. Rent on a factory building donated by the citythe agreement calls for a fixed fee payment, unless 200,000 labor hours are worked, in which case no rent need be paid. f. Salaries of repair workersone repair worker is needed for every 1,000 machine hours or less (i.e., 0 to 1,000 hours requires one repair worker, 1,001 to 2,000 hours requires two repair workers, etc.).Miller Minerals Co. manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired temperature. The process requires a constant level of heat, so the furnaces are maintained at a set temperature for 24 hours a day. Although units are not continuously processed, management desires that the variable cost be charged directly to the product and the fixed cost to the factory overhead. The following data have been collected for the year: Required: 1. Separate the variable and fixed elements, using the high-low method. 2. Determine the variable cost to be charged to the product for the year. (Hint: First determine the number of annual units produced.) 3. Determine the fixed cost to be charged to factory overhead for the year.Scattergraph method Using the data in P4-2 and a piece of graph paper: 1. Plot the data points on the graph and draw a line by visual inspection, indicating the trend shown by the data points. 2. Determine the variable cost per unit and the total fixed cost from the information on the graph. 3. Determine the variable cost to be charged to the product for the year. 4. Determine the fixed cost to be charged to factory overhead for the year. 5. Do these answers agree with the answers to P4-2? Why or why not?Using the data in P4-2 and Microsoft Excel: 1. Separate the variable and fixed elements. 2. Determine the cost to be charged to the product for the year. 3. Determine the cost to be charged to factory overhead for the year. 4. Determine the plotted data points using Chart Wizard. 5. Determine R2. 6. How do these solutions compare to the solutions in P4-2 and P4-3? 7. What does R2 tell you about this cost model?Listed below are the budgeted factory overhead costs for 2011 for Moss Industries at a projected level of 2,000 units: Required: Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)Menlo Materials is divided into five departments, Mixing, Blending, Finishing, Factory Office, and Building Maintenance. The first three departments are engaged in production work. Factory Office and Building Maintenance are service departments. During the month of June, the following factory overhead was incurred for the departments:
The bases for distributing service department expenses to the other departments follow:
Building Maintenance—On the basis of floor space occupied by the other departments as follows: Mixing, 10,000 sq ft; Blending, 4,500 sq ft; Finishing, 10,500 sq ft; and Factory Office, 7,000 sq ft.
Factory Office—On the basis of number of employees as follows: Mixing, 30; Blending, 20; and Finishing, 50.
Required:
Prepare a schedule showing the distribution of the service departments’ expenses using the direct distribution method.
Distribution of service department costs to production departments using the sequential distribution method
Required:
Using the information in P4-6, prepare a schedule showing the distribution of the service departments’ expenses using the sequential distribution method in the order of number of other departments served. (Hint: First distribute the service department that services the greater number of other departments.)
Journalizing the distribution of service department costs to production departments
Required:
Using your solution to P4-7, prepare journal entries for the following:
The distribution of the total factory overhead of $79,400 to the individual production and service departments where it originated.
The distribution of the Building Maintenance overhead to the appropriate other departments.
The distribution of the Factory Office overhead to the appropriate other departments.
Channel Products Inc. uses the job order cost system of accounting. The following is a list of the jobs completed during March, showing the charges for materials issued to production and for direct labor.
Assume that factory overhead is applied on the basis of direct labor costs and that the predetermined rate is 200%.
Required:
Compute the amount of overhead to be added to the cost of each job completed during the month.
Compute the total cost of each job completed during the month.
Compute the total cost of producing all the jobs finished during the month.
Determining job costcalculation of predetermined rate for applying overhead by direct labor cost and direct labor hour methods Beemer Products Inc. has its factory divided into three departments, with individual factory overhead rates for each department. In each department, all the operations are sufficiently alike for the department to be regarded as a cost center. The estimated monthly factory overhead for the departments is as follows: Forming, 64,000; Shaping, 36,000; and Finishing, 10,080. The estimated production data include the following: The job cost ledger shows the following data for X6, which was completed during the month: Required: Determine the cost of X6. Assume that the factory overhead is applied to production orders, based on the following: 1. Direct labor cost 2. Direct labor hours (Hint: You must first determine overhead rates for each department, rounding rates to the nearest cent.)Focus Fabrication Co. uses ABC. The factory overhead budget for the coming period is 500,000, consisting of the following: The potential allocation bases and their estimated amounts were as follows: Required: 1. Determine the overhead rate for each cost pool, using the most appropriate allocation base for each pool. (Use each allocation base only once.) 2. Job 2525 required 25,000 for direct materials, 10,000 for direct labor, 500 direct labor hours, 1,000 machine hours, five setups, and three design changes. Determine the cost of Job 2525.Mansfield Manufacturing Co. uses ABC. The factory overhead budget for the coming period is 750,000, consisting of the following: The potential allocation bases and their estimated amounts were as follows: Required: 1. Determine the overhead rate for each cost pool, using the most appropriate allocation base for each pool. (Use each allocation base only once.) 2. Job 007 required 15,000 for direct materials, 20,000 for direct labor, 800 direct labor hours, 1,200 machine hours, six setups, and four component parts. Determine the cost of Job 007. 3. Assume Mansfield used the direct labor hour method to apply factory overhead to Job 007. Determine the predetermined factory overhead rate using the direct labor hour method. 4. Determine the cost of Job 007 using the direct labor hour method to apply factory overhead.Hughes Products Inc. uses a job order cost system. Selected transactions dealing with factory items for the month follow: a. Requisitioned indirect materials from storeroom, 3,200. b. Purchased, on account, factory supplies for future needs, 4,400. c. Purchased parts, on account, for repairing a machine, 1,400. d. Requisitioned factory supplies from storeroom, 900. e. Returned other defective factory supplies to vendor, 700. f. Factory rent accrued for the month, 2,400. g. Returned previously requisitioned factory supplies to store room, 350. h. Depreciation of machinery and equipment, 2,800. i. Payroll taxes liability for month, 3,200. j. Heat, light, and power charges payable for the month, 6,400. k. Expired insurance on inventories, 1,350. l. Factory overhead applied to production, 34,600. m. Indirect labor for the month, 2,600. n. Goods completed and transferred to finished goods: materials, 14,400; labor, 40,400; factory overhead, 30,400. Required: Record the previous transactions. Assume that the records include a control account and a subsidiary ledger for factory overhead, to which the entries will be posted at some later date.Abbey Products Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, 60,000; estimated materials costs, 50,000; estimated direct labor costs, 60,000; estimated direct labor hours, 10,000; estimated machine hours, 20,000; work in process at the beginning of the month, none. The actual factory overhead incurred for November was 80,000, and the production statistics on November 30 are as follows: Required: 1. Compute the predetermined rate, based on the following: a. Direct labor cost b. Direct labor hours c. Machine hours 2. Using each of the methods, compute the estimated total cost of each job at the end of the month. 3. Determine the under-or overapplied factory overhead, in total, at the end of the month under each of the methods. 4. Which method would you recommend? Why?The following information, taken from the books of Herman Brothers Manufacturing represents the operations for January: The job cost system is used, and the February cost sheet for Job M45 shows the following: The following actual information was accumulated during February: Required: 1. Using the January data, ascertain the predetermined factory overhead rates to be used during February, based on the following: a. Direct labor cost b. Direct labor hours c. Machine hours 2. Prepare a schedule showing the total production cost of Job M45 under each method of applying factory overhead. 3. Prepare the entries to record the following for February operations: a. The liability for total factory overhead. b. Distribution of factory overhead to the departments. c. Application of factory overhead to the work in process in each department, using direct labor hours. (Use the predetermined rate calculated in Requirement 1.) d. Closing of the applied factory overhead accounts. e. Recording under- and overapplied factory overhead and closing the actual factory overhead accounts.Rockford Company has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and Assembly. The direct labor hour method is used to apply factory overhead to the jobs being worked on in Machining and Assembly. The company expects each production department to use 30,000 direct labor hours during the year. The estimated overhead rates for the year include the following: During the year, both Machining and Assembly used 28,000 direct labor hours. Factory overhead costs incurred during the year follow: In determining application rates at the beginning of the year, cost allocations were made as follows, using the sequential distribution method: Building Maintenance to: General Factory Overhead, 10%; Machining, 50%; Assembly, 40%. General factory overhead was distributed according to direct labor hours. Required: Determine the under- or overapplied overhead for each production department. (Hint: First you must distribute the service department costs.)Luna Manufacturing Inc. completed Job 2525 on May 31, and there were no jobs in process in the plant. Prior to June 1, the predetermined overhead application rate for June was computed from the following data, based on an estimate of 5,000 direct labor hours: The factory has one production department and uses the direct labor hour method to apply factory overhead. Three jobs are started during the month, and postings are made daily to the job cost sheets from the materials requisitions and labor-time records. The following schedule shows the jobs and amounts posted to the job cost sheets: The factory overhead control account was debited during the month for actual factory overhead expenses of 27,000. On June 11, Job 2526 was completed and delivered to the customer using a mark-on percentage of 50% on manufacturing cost. On June 24, Job 2527 was completed and transferred to Finished Goods. On June 30, Job 2528 was still in process. Required: 1. Prepare job cost sheets for Jobs 2526, 2527, and 2528, including factory overhead applied when the job was completed or at the end of the month for partially completed jobs. 2. Prepare journal entries as of June 30 for the following: a. Applying factory overhead to production. b. Closing the applied factory overhead account. c. Closing the factory overhead account. d. Transferring the cost of the completed jobs to finished goods. e. Recording the cost of the sale and the sale of Job 2526.Phillips Products, Inc. had a remaining credit balance of $10,000 in its under- and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts:
Required:
Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is not considered to be material.
Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is considered to be material.
Nathan Industries had a remaining debit balance of $20,000 in its under- and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts:
Required:
Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is not considered to be material.
Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is considered to be material.
Chrome Solutions Company 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:
Additional information:
The balance of the materials account represents the following:
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.
The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.)
The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer.
At the beginning of the year, factory overhead application rates were based on the following data:
In October, the following transactions were recorded:
Purchased the following materials and supplies on account:
The following materials were issued to the factory:
Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively.
Factory wages and office, sales, and administrative salaries are paid at the end of each month. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively, and that none of the employees had reached the $8,000 limit.) Record the payroll distribution for October.
Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300.
Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.)
Annual depreciation on plant assets is calculated using the following rates (round to nearest dollar):
Factory buildings–5%
Machinery and equipment–20%
Office equipment–20%
The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1.
The summary of factory overhead prepared from the factory overhead ledger is reproduced here:
The total expenses of the Maintenance Department are distributed on the basis of floor space occupied by the Power Department (8,820 sq ft), Stamping Department (19,500 sq ft), and Plating Department (7,875 sq ft). The power department expenses are then allocated equally to the Stamping and Plating departments.
After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead.
Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month.
During the month, Jobs 803 and 905 were sold with a mark-on percentage of 50% on cost.
Received $55,500 from customers in payment of their accounts.
Checks were issued in the amount of $43,706 for payment of the payroll.
Required:
Set up the beginning trial balance in T-accounts.
Prepare materials inventory ledger cards and enter October 1 balances.
Prepare a Payroll Summary and Schedule of Earnings and Payroll Taxes for the month of October.
Set up job cost sheets as needed.
Record all transactions and related entries for October and post to T-accounts.
Prepare a service department expense distribution worksheet for October.
At the end of the month:
Analyze the balance in the materials account, the work in process account, and the finished goods account.
Prepare the statement of cost of goods manufactured for the month ended October 31.
Activity-based Costing
Video Options Ltd. manufactures two types of DVD players: standard 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. Bill Merch, vice president—Marketing, is confused because the numbers provided by Terry Green, 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.
Merch informs Green 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. Bill 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:
Factory overhead is currently applied using a plantwide rate based on direct labor cost. This year’s rate was computed as follows:
Green, knowing that you had recently studied ABC in your cost accounting course, employs you as a consultant to determine what effect its usage would have on the product costs. You first gathered the following data:
Required:
From the data that you gathered, determine the best allocation base for each of the four components of factory overhead.
Compute an overhead rate for each of the four components.
Determine the new unit cost for standard and deluxe models using ABC.
Why are the product costs so dramatically different when ABC is used?
Would Video Options’ selling prices be closer to those of the competition if ABC were used?
What are the two basic systems of cost accounting, and under what conditions may each be used advantageously?Following is a list of manufactured products. For each product, would a job order or a process cost system be used to account for the costs of production? a. lumber b. buildings c. airplanes d. gasoline e. cereal f. textbooks g. paint h. jeansGive three examples of industries and companies within industries that would use process costing.What is the primary difference between the two cost accounting systems regarding the accumulation of costs and the calculation of unit costs?What is the difference between the term unit cost as commonly used in a process cost system and the term job cost as commonly used in a job order cost system?How do the two cost accounting systems differ in accounting for each of the following items? a. materials b. labor c. factory overheadWhat is the primary objective in accumulating costs by departments?8Q9QWhat would be the effect on the unit cost of finished goods if an estimate of the stage of completion of work in process was: too high? too low?What information is reflected on a production report?What are the four main sections of a cost of production summary?13Q14QIn determining the costs transferred to a third department from a second department, are the costs from a first department considered? Are they considered in the computation of the ending work in process in the second department?16Q17QCompute the equivalent production (unit output) for the month for each of the following situations:During the month, a company with no departmentalization incurred costs of 45,000 for materials, 36,000 for labor, and 22,500 for factory overhead. There were no units in process at the beginning or at the end of the month, and 20,000 units were completed. Determine the unit cost for the month for materials, labor, factory overhead, and the total unit cost. (Round unit costs to three decimal places.)Comacho Chemical Co. recorded costs for the month of 18,900 for materials, 44,100 for labor, and 26,250 for factory overhead. There was no beginning work in process, 8,000 units were finished, and 3,000 units were in process at the end of the period, two-thirds completed. Compute the months unit cost for each element of manufacturing cost and the total per unit cost. (Round unit costs to three decimal places.)Norwood Co. had 200 units in work in process at the beginning of the month. During the month, 7,500 units were started in production, 6,800 of which, along with the beginning work in process, were completed by the end of the month. The uncompleted units were in ending inventory, one-half complete. What were the equivalent units of production for the month?Using the following data, determine which figures should be inserted in the blank spaces.The records of Burris Inc. reflect the following data: Work in process, beginning of month2,000 units one-half completed at a cost of 1,250 for materials, 675 for labor, and 950 for overhead. Production costs for the monthmaterials, 99,150; labor, 54,925; factory overhead, 75,050. Units completed and transferred to stock38,500. Work in process, end of month3,000 units, one-half completed. Compute the months unit cost for each element of manufacturing cost and the total per unit cost.The records of Stone Inc. reflect the following data: Work in process, beginning of month4,000 units one-fourth completed at a cost of 2,500 for materials, 1,400 for labor, and 1,800 for overhead. Production costs for the monthmaterials, 130,000; labor, 70,000; and factory overhead, 82,000. Units completed and transferred to stock45,000. Work in process, end of month5,000 units, one-half completed. Compute the months unit cost for each element of manufacturing cost and the total per unit cost. (Round unit costs to three decimal places.)Argo Manufacturing Co. had 500 units, three-fifths completed, in process at the beginning of the month. During the month, 2,000 units were started in process and finished. There was no work in process at the end of the month. Unit cost of production for the month was 1.20. Costs for materials, labor, and factory overhead incurred in the current month totaled 2,655. Calculate the unit cost for the prior month. (Hint: You must first determine what the dollar balance in work in process must have been at the beginning of the month, as well as the equivalent production of the units in beginning inventory.)AAA Appliances Inc. has two production departments. The nature of the process is such that no units remain in process in Finishing at the end of the period. At the beginning of the period, 10,000 units with a cost of 30,000 were transferred from Assembly to Finishing. Finishing incurred costs of 8,800 for materials, 7,200 for labor, and 8,800 for factory overhead, and finished 10,000 units during the month. a. Determine the unit cost for the month in Finishing. b. Determine the unit cost of the products transferred to finished goods.AAA Appliances Inc. has two production departments. The nature of the process is such that no units remain in process in Finishing at the end of the period. At the beginning of the period, 10,000 units with a cost of 30,000 were transferred from Assembly to Finishing. Finishing incurred costs of 8,800 for materials, 7,200 for labor, and 8,800 for factory overhead, and finished 10,000 units during the month. Using the data in E5-9, prepare a statement of cost of goods manufactured for the month ended January 31, 2016, assuming that no further work was done in Assembly during January.11E12E13E14EChavez Concrete Inc. has two production departments. Blending had 1,000 units in process at the beginning of the period, two-fifths complete. During the period 7,800 units were received from Mixing, 8,200 units were transferred to the finished goods storeroom, and 600 units were in process at the end of the period, 1/3 complete. The cost of the beginning work in process was: The costs during the month were: a. Determine the unit cost for the month in Blending. b. Determine the total cost of the products transferred to finished goods. c. Determine the total cost of the ending work in process inventory in Blending.Chavez Concrete Inc. has two production departments. Blending had 1,000 units in process at the beginning of the period, two-fifths complete. During the period 7,800 units were received from Mixing, 8,200 units were transferred to the finished goods storeroom, and 600 units were in process at the end of the period, 1/3 complete. The cost of the beginning work in process was: The costs during the month were: 1. Using the data in E5-15, prepare a cost of production summary for the month ended January 31, 2016. 2. Prepare a journal entry to transfer the cost of the completed units from Blending to the finished goods storeroom.17E18E19EGeneva Products Co. produces a latex paint and uses the process cost system. Materials, labor, and overhead are added evenly throughout the process. The following information was obtained from the companys accounts at the end of February. Production Costs Costs incurred during month: Required: Prepare a cost of production summary for February.Dublin Brewing Co. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during October: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 13,000 units finished and transferred to stockroom Work in process, end of period, 2,000 units one-half completed Required: Prepare a cost of production summary for October.Kokomo Kayak Inc. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during the month of March: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 18,000 units finished and transferred to stockroom. Work in process, end of period, 3,000 units, two-thirds completed. Required: Prepare a cost of production summary for March.