Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 3.49AP
Determine and record job costs (Learning Objectives 2, 3, 4, & 6)
Veon Homes manufactures prefabricated chalets in Colorado. The company uses a perpetual inventory system and a
- a. Purchased materials on account, $490,000.
- b. Incurred total manufacturing wages of $115,000, which included both direct labor and indirect labor. Used direct labor in manufacturing as follows:
| Direct Labor | |
| Chalet 13 | $14,200 |
| Chalet 14 | $28,500 |
| Chalet 15 | $19,900 |
| Chalet 16 | $21,900 |
- c. Requisitioned direct materials in manufacturing as follows:
| Direct Materials | |
| Chalet 13 | $41,400 |
| Chalet 14 | $56,700 |
| Chalet 15 | $62,400 |
| Chalet 16 | $66,500 |
- d.
Depreciation of manufacturing equipment used on different chalets, $6,300. - e. Other
overhead costs incurred on Chalets 13–16:
| Equipment rentals paid in cash | $10,600 |
| Prepaid plant insurance expired | $ 8,000 |
- f. Allocated overhead to jobs at the predetermined rate of 60% of direct labor cost.
- g. Chalets completed: 13, 15, and 16.
- h. Chalets sold on account: 13 for $92,000 and 16 for $141,000.
Requirements
- 1. Record the preceding events in the general journal.
- 2. Open T-accounts for Work in Process Inventory and Finished Goods Inventory.
Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. - 3. Summarize the job cost of the unfinished chalet and show that this equals the ending balance in Work in Process Inventory.
- 4. Summarize the job cost of the completed chalet that has not yet been sold and show that this equals the ending balance in Finished Goods Inventory.
- 5. Compute the gross profit on each chalet that was sold. What costs must the gross profit cover for Veon Homes?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
I have the following information: direct materials $250 and total manufacturing cost $700. Overhead applied to jobs at a rate of 200% of direct labor cost. This is for Chapter 2 job costing in managerial accounting. I am supposed to figure out conversion cost, direct labor cost, and manufacturing overhead.
I know the formula for conversion cost= direct labor + manufacturing OH
Prime cost= direct labor + direct materials
How do I figure out direct labor cost with the given information? The learning objective states calcualte predetermined overhead rate, but I do not have estimated manufacturing cost and estimated labor. Can you please help?
Thanks,
Erica Gordon
Click to watch the Tell Me More Learning Objective 1 video and then answer the questions below.
1. Which of the following manufacturers is most likely to use a process cost system?
Purse manufacturer
Sports drink manufacturer
Automobile manufacturer
Guitar manufacturer
2. Process and job order cost systems are similar in that both systems _______.
record and summarize product costs
classify product costs as direct materials, direct labor, and factory overhead
allocate factory overhead costs to products
All of these choices are correct.
Click to watch the Tell Me More Learning Objective 3 video and then answer the questions below.
1. The journal entry to recognize depreciation on machinery is ________.
a debit to Factory Overhead and a credit to Accumulated Depreciation
a debit to Accumulated Depreciation and a credit to Factory Overhead
a debit to Factory Overhead and a credit to Depreciation Expense
a debit to Depreciation Expense and a credit to Factory Overhead
2. Process and job order cost systems are similar in ________ manner.
recording and summarizing product costs
classifying product costs as direct materials, direct labor, and factory overhead
allocating factory overhead costs to products
All of these choices are correct.
Chapter 3 Solutions
Managerial Accounting (5th Edition)
Ch. 3 - (Learning Objective 1) For which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 3) The amount of manufacturing...Ch. 3 - (Learning Objective 4) Which of the following is...Ch. 3 - (Learning Objective 5) Which of the following is...Ch. 3 - (Learning Objective 5) Assuming the amount of...Ch. 3 - Prob. 8QCCh. 3 - Prob. 9QCCh. 3 - Prob. 10QC
Ch. 3 - Identify product costs, period costs, and product...Ch. 3 - Decide on product costing system (Learning...Ch. 3 - Determine the flow of costs between inventory...Ch. 3 - Understanding key document terms in a job cost...Ch. 3 - Compute a professional billing rate (Learning...Ch. 3 - Prob. 3.6SECh. 3 - Continuation of S3-6: compute total allocated...Ch. 3 - Continuation of S3-7: determine over- or under...Ch. 3 - Prob. 3.9SECh. 3 - Calculate job cost and billing at appliance repair...Ch. 3 - Calculating overallocated or underallocated...Ch. 3 - Prob. 3.12SECh. 3 - Record manufacturing labor costs (Learning...Ch. 3 - Prob. 3.14SECh. 3 - Prob. 3.15SECh. 3 - Understanding key terms (Learning Objectives 1, 2,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Prob. 3.18AECh. 3 - Determine the cost of a job and use it for pricing...Ch. 3 - Compute a predetermined overhead rate and...Ch. 3 - Prob. 3.21AECh. 3 - Prob. 3.22AECh. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Job cost and bid price at a consulting firm...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Understand the flow of costs in a job cost shop...Ch. 3 - Prob. 3.33BECh. 3 - Prob. 3.34BECh. 3 - Prob. 3.35BECh. 3 - Sustainability and job costing (Learning...Ch. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Prob. 3.43BECh. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Job costing or process costing for wedding...Ch. 3 - Discussion Questions 1. Why would it be...Ch. 3 - Unwrapped or How Its Made Go to www.YouTube.com...Ch. 3 - Ethics involved with choice of cost driver...Ch. 3 - Prob. 3.61ACTCh. 3 - Issues with cost of job (Learning Objectives 2, 3,...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Asset Retirement Obligation. On January 1, Evergreen Utilities Company acquired a power plant at a total cost o...
Intermediate Accounting
Matching graphs with descriptions of cost and revenue behavior. (D. Green, adapted) Given here are a number of ...
Cost Accounting (15th Edition)
Use the journals and ledgers that follow. Total the journals. Post the transactions to the subsidiary ledger an...
Principles of Accounting Volume 1
E9-15 Identifying and correcting internal control weakness
Learning Objective 1
Suppose The Right Rig Dealers...
Horngren's Accounting (11th Edition)
Communication Activity 9-1
In 150 words or fewer, explain the different methods that can be used to calculate d...
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
On what three things is equivalence based?
Construction Accounting And Financial Management (4th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A. Determine the prime cost and conversion cost of the school crests produced B. Prepare an income statement for personal All School Logos and More for the quarter ended December 31, 2021. List the non manufacturing overheads in order of size starting with the largest.arrow_forwardCost Identification Following is a list of cost terms described in the chapter as well as a list of brief descriptive settings for each item. Cost terms: a. Opportunity cost b. Period cost c. Product cost d. Direct labor cost e. Selling cost f. Conversion cost g. Prime cost h. Direct materials cost i. Manufacturing overhead cost j. Administrative cost Settings: 1. Marcus Armstrong, manager of Timmins Optical, estimated that the cost of plastic, wages of the technician producing the lenses, and overhead totaled 30 per pair of single-vision lenses. 2. Linda was having a hard time deciding whether to return to school. She was concerned about the salary she would have to give up for the next 4 years. 3. Randy Harris is the finished goods warehouse manager for a medium-sized manufacturing firm. He is paid a salary of 90,000 per year. As he studied the financial statements prepared by the local certified public accounting firm, he wondered how his salary was treated. 4. Jamie Young is in charge of the legal department at company headquarters. Her salary is 95,000 per year. She reports to the chief executive officer. 5. All factory costs that are not classified as direct materials or direct labor. 6. The new product required machining, assembly, and painting. The design engineer asked the accounting department to estimate the labor cost of each of the three operations. The engineer supplied the estimated labor hours for each operation. 7. After obtaining the estimate of direct labor cost, the design engineer estimated the cost of the materials that would be used for the new product. 8. The design engineer totaled the costs of materials and direct labor for the new product. 9. The design engineer also estimated the cost of converting the raw materials into their final form. 10. The auditor for a soft drink bottling plant pointed out that the depreciation on the delivery trucks had been incorrectly assigned to product cost (through overhead). Accordingly, the depreciation charge was reallocated on the income statement. Required: Match the cost terms with the settings. More than one cost classification may be associated with each setting; however, select the setting that seems to fit the item best. When you are done, each cost term will be used just once.arrow_forwardE4-23A Use ABC to allocate manufacturing overhead (Learning Objective 2) Several years after reengineering its production process, Biltmore Corporation hired a new controller, Rachael Johnson. She developed an ABC system very similar to the one used by Biltmore’s chief rival, Westriver. Part of the reason Johnson developed the ABC system was because Biltmore’s profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, Biltmore had used a plantwide overhead rate based on direct labor hours that was developed years ago. For the upcoming year, Biltmore’s budgeted ABC manufacturing overhead allocation rates are as follows: Activity Allocation Base Activity Cost Allocation Rate Materials handling # of parts $3.84 per part Machine setup # of setups $330.00 per setup Insertion of parts # of parts $30.00 per part Finishing Finishing DL hrs $54.00 per hour The…arrow_forward
- Kapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $55,900 $36,800 $79,600 Direct Labor Cost $46,200 $38,700 $54,600 Labor Hours 3,310 3,520 3,900 The company applies overhead at a rate of $17.00 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $398,400. The actual overhead for the month was $153,200, of which $129,300 should be credited to accounts payable and $40,000 should be credited to Accumulated Depreciation.Determine the costs that should be assigned to each of the jobs. State University On-the-Go Home Precious Pre-school TOTAL Direct Materials Direct Labor Applied Overhead Total Job Cost Manufacturing Overhead Debit Credit Double line Double linearrow_forwardKapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $54,100 $35,100 $79,700 Direct Labor Cost $43,600 $41,400 $53,500 Labor Hours 3,210 3,690 4,120 The company applies overhead at a rate of $20.00 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $401,200. The allocated overhead for the month was $149,800, of which $129,200 should be credited to accounts payable and $41,700 should be credited to Accumulated Depreciation.arrow_forwardKapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $55,900 $37,200 $79,700 Direct Labor Cost $43,500 $38,800 $53,100 Labor Hours 3,360 3,550 3,810 The company applies overhead at a rate of $16.00 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $406,800. The actual overhead for the month was $148,400, of which $118,600 should be credited to accounts payable and $41,500 should be credited to Accumulated Depreciation.Determine the costs that should be assigned to each of the jobs. State University On-the-Go Home Precious Pre-school TOTAL Direct Materials Direct Labor Applied Overhead Total Job Cost Manufacturing Overhead Debit Creditarrow_forward
- Kapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $54,200 $34,800 $81,300 Direct Labor Cost $43,600 $40,000 $55,900 Labor Hours 3,050 3,630 4,000 The company applies overhead at a rate of $17.50 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $396,600. The allocated overhead for the month was $146,800, of which $122,000 should be credited to accounts payable and $40,400 should be credited to Accumulated Depreciation.1. Determine the costs that should be assigned to each of the jobs. State University On-the-Go Home Precious Pre-school TOTAL Direct Materials Direct Labor Actual Overhead Total Job Cost Manufacturing Overhead Debit Credit 2. Do the adjustment for…arrow_forwardKapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $53,000 $36,900 $81,800 Direct Labor Cost $44,600 $40,700 $53,600 Labor Hours 2,920 3,510 4,160 The company applies overhead at a rate of $16.00 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $392,700. The actual overhead for the month was $147,400, of which $122,000 should be credited to accounts payable and $38,000 should be credited to Accumulated Depreciation.Determine the costs that should be assigned to each of the jobs.arrow_forwardKapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $53,800 $36,000 $79,400 Direct Labor Cost $43,800 $40,500 $56,000 Labor Hours 3,250 3,600 4,050 The company applies overhead at a rate of $20.00 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $406,400. The allocated overhead for the month was $141,200, of which $126,100 should be credited to accounts payable and $39,200 should be credited to Accumulated Depreciation.1. Determine the costs that should be assigned to each of the jobs.arrow_forward
- Kapoor Catering Co. uses a job cost system. Its activities in November 2020, the first month of operation, were as follows: Information State University On-the-Go Home Precious Pre-school Direct Materials Cost (food) $53,800 $36,000 $79,400 Direct Labor Cost $43,800 $40,500 $56,000 Labor Hours 3,250 3,600 4,050 The company applies overhead at a rate of $20.00 per labor hour. It completed all of its jobs in November. Total revenue for the three jobs amounted to $406,400. The allocated overhead for the month was $141,200, of which $126,100 should be credited to accounts payable and $39,200 should be credited to Accumulated Depreciation.1. Determine the costs that should be assigned to each of the jobs. State University On-the-Go Home Precious Pre-school TOTAL Direct Materials Direct Labor Actual Overhead Total Job Cost Manufacturing Overhead Debit Credit Double line Double line 2. Do the…arrow_forwardags R Us manufactures back packs for schools. The business uses a perpetual inventory systemand has a highly labour intensive production process, so it applies manufacturing overhead basedon direct labour hours. Any overhead variance is closed out to Cost of Goods Sold.The business’s pre-determined overhead application rate for 2018 was computed from thefollowing data:Total estimated factory overheadsTotal estimated direct labour hours$4,200,00035,000During the first month of 2018, the business recorded the following transactions.i) Purchased materials on account, $500,000ii) Incurred manufacturing wages of $1,065,000iii) Issued direct materials and used direct labour in manufacturingDirect Materials Direct Labour Direct Labour HoursJob 401 $100,000 $220,000 1,200Job 402 81,000 190,000 1,000Job 403 90,000 205,000 1,100Job 404 150,000 290,250 1,800iv) Issued indirect materials to production, $80,000v) Charged indirect manufacturing wages to production, $159,750vi) Depreciation expense…arrow_forwardMesa Designs produces a variety of hardware products, primarily for the do-it-yourself (DIY) market. As part of your job interview as a summer intern at Mesa, the cost accountant provides you with the following (fictitious) data for the year (in $000). Inventory information: 1/1/00 12/31/00 Direct materials $96 $110 Work-in-process 152 136 Finished goods 1,974 2,026 Other information: For the year ’00 Administrative costs $4,200 Depreciation (Factory) 5,560 Depreciation (Machines) 9,240 Direct labor 13,000 Direct materials purchased 10,300 Indirect labor (Factory) 3,340 Indirect materials (Factory) 960 Property taxes (Factory) 370 Selling costs 2,140 Sales revenue 60,220 Utilities (Factory) 1,060 Required: 1. Prepare a cost of goods sold statement. 2. Prepare an income statement.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY