Explore BrainMass
Share

Explore BrainMass

    Apply over head cost for managerial accounting

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Online Homework System Assignment Worksheet
    5/3/09 - 4:30 PM

    Name: ____________________________ Class: ACC 560 - Managerial Accounting - Spring 2009 - Section 16016
    Class #: ____________________________ Section #: ____________________________
    Instructor: Kara Mahon Assignment: Chapter 3

    --------------------------------------------------------------------------------

    Question 1: (8 points)
    Exercise 3-1 Process Costing and Job-Order Costing [LO1]

    Which would be more appropriate in each of the following situations?job-order costing or process costing?

    a.
    A custom yacht builder.
    __________

    b.
    A golf course designer.
    __________

    c.
    A potato chip manufacturer.
    __________

    d.
    A business consultant.
    __________

    e.
    A plywood manufacturer.
    __________

    f.
    A soft-drink bottler.
    __________

    g.
    A film studio.
    __________

    h.
    A firm that supervises bridge construction projects.
    __________

    i.
    A manufacturer of fine custom jewelry.
    __________

    j.
    A made-to-order clothing factory.
    __________

    k.
    A factory making one personal computer model.
    __________

    l.
    A fertilizer factory.
    __________

    --------------------------------------------------------------------------------

    Question 2: (8 points)
    Exercise 3-3 Compute the Predetermined Overhead Rate [LO3]

    Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year it estimated that its total manufacturing overhead would be $586,000 and the total direct labor would be 40,000 hours. Its actual total manufacturing overhead for the year was $713,400 and its actual total direct labor was 41,000 hours.

    Required:

    Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

    Predetermined overhead rate
    $
    ____________
    per DLH

    --------------------------------------------------------------------------------

    Question 3: (8 points)
    Exercise 3-4 Prepare Journal Entries [LO4]

    Kirkaid Company recorded the following transactions for the just completed month.

    a.
    $86,000 in raw materials were purchased on account.

    b.
    $84,000 in raw materials were requisitioned for use in production. Of this amount, $72,000 was for direct materials and the remainder was for indirect materials.

    c.
    Total labor wages of $108,000 were incurred. Of this amount, $105,000 was for direct labor and the remainder was for indirect labor.

    d.
    Additional manufacturing overhead costs of $197,000 were incurred.

    Required:

    Record the above transactions in journal entries. (Omit the "$" sign in your response.)

    General Journal
    Debit
    Credit

    a.
    __________
    ____________

    __________

    ____________

    b.
    __________
    ____________

    __________
    ____________

    __________

    ____________

    c.
    __________
    ____________

    __________
    ____________

    __________

    ____________

    d.
    __________
    ____________

    __________

    ____________

    --------------------------------------------------------------------------------
    E3_4_id6

    E3_4_id8

    E3_4_id12

    E3_4_id14

    --------------------------------------------------------------------------------

    Question 4: (8 points)

    Exercise 3-6 Applying Overhead; Cost of Goods Manufactured [LO5, LO6, LO8]

    The following cost data relate to the manufacturing activities of Black Company during the just completed year:

    Manufacturing overhead costs:

    Property taxes, factory
    $
    3,000

    Utilities, factory

    5,000

    Indirect labor

    10,000

    Depreciation, factory

    24,000

    Insurance, factory

    6,000

    Total actual manufacturing overhead costs
    $
    48,000

    Other costs incurred:

    Purchases of raw materials
    $
    32,000

    Direct labor cost
    $
    40,000

    Inventories:

    Raw materials, beginning
    $
    8,000

    Raw materials, ending
    $
    7,000

    Work in process, beginning
    $
    6,000

    Work in process, ending
    $
    7,500

    --------------------------------------------------------------------------------

    The company uses a predetermined overhead rate to apply overhead cost to production. The rate for the year was $5 per machine-hour; a total of 10,000 machine-hours was recorded for the year. All raw materials ultimately become direct materials?none are classified as indirect materials.

    Requirement 1:

    Compute the amount of underapplied or overapplied overhead cost for the year. (Input all amounts as positive values. Omit the "$" sign in your response.)

    __________ overhead cost
    $
    ____________

    Requirement 2:

    Prepare a schedule of cost of goods manufactured for the year. (Input all amounts as positive values. Omit the "$" sign in your response.)

    Direct materials:

    __________
    $
    ____________

    __________ : __________

    ____________

    __________

    ____________

    __________ : __________

    ____________

    Raw materials used in production

    $
    ____________

    __________

    ____________

    __________

    ____________

    Total manufacturing cost

    ____________

    __________ : __________

    ____________

    ____________

    __________ : __________

    ____________

    Cost of goods manufactured

    $
    ____________

    --------------------------------------------------------------------------------

    --------------------------------------------------------------------------------

    Question 5: (23 points)

    Problem 3-22 T-Accounts; Overhead Rates; Journal Entries [LO2, LO3, LO4, LO5, LO7]

    Kenworth Company uses a job-order costing system. Only three jobs?Job 105, Job 106, and Job 107?were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company's operating year. Data from the job cost sheets of the three jobs are given below:

    Job Cost Sheet

    Job 105
    Job 106
    Job 107

    November costs incurred:

    Direct materials
    $
    16,500
    $
    9,300
    $
    0

    Direct labor
    $
    13,000
    $
    7,000
    $
    0

    Manufacturing overhead
    $
    20,800
    $
    11,200
    $
    0

    December costs incurred:

    Direct materials
    $
    0
    $
    8,200
    $
    21,300

    Direct labor
    $
    4,000
    $
    6,000
    $
    10,000

    Manufacturing overhead

    ?

    ?

    ?

    --------------------------------------------------------------------------------

    The following additional information is available:

    a.
    Manufacturing overhead is applied to jobs on the basis of direct labor cost.

    b.
    Balances in the inventory accounts at November 30 were as follows:

    Raw Materials
    $
    40,000

    Work in Process

    ?

    Finished Goods
    $
    85,000

    --------------------------------------------------------------------------------

    Requirement 1:

    Prepare journal entries for December as follows:

    (a)
    Prepare an entry to record the issue of materials into production. (In the case of direct materials, it is not necessary to make a separate entry for each job.) Indirect materials used during December totaled $4,000. (Omit the "$" sign in your response)

    General Journal
    Debit
    Credit

    __________
    ____________

    __________
    ____________

    __________

    ____________

    --------------------------------------------------------------------------------

    (b)
    Prepare an entry to record the incurrence of labor cost. (In the case of direct labor cost, it is not necessary to make a separate entry for each job.) Indirect labor cost totaled $8,000 for December. (Omit the "$" sign in your response)

    General Journal
    Debit
    Credit

    __________
    ____________

    __________
    ____________

    __________

    ____________

    --------------------------------------------------------------------------------

    (c)
    Prepare an entry to record the incurrence of $19,000 in various actual manufacturing overhead costs for December (credit Accounts Payable). Post this entry to the appropriate T-accounts. (Omit the "$" sign in your response)

    General Journal
    Debit
    Credit

    __________
    ____________

    __________

    ____________

    --------------------------------------------------------------------------------

    (d)
    Using the predetermined overhead rate, prepare a journal entry to record the application of overhead cost to jobs for December (it is not necessary to make a separate entry for each job). (Omit the "$" sign in your response.)

    General Journal
    Debit
    Credit

    __________
    ____________

    __________

    ____________

    --------------------------------------------------------------------------------

    (e)
    As stated earlier, Job 105 was completed during December. Prepare a journal entry to show the transfer of this job off of the production line and into the finished goods warehouse. (Omit the "$" sign in your response.)

    General Journal
    Debit
    Credit

    __________
    ____________

    __________

    ____________

    --------------------------------------------------------------------------------

    Requirement 2:

    Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing Overhead. Enter the November 30 inventory balances given above; in the case of Work in Process, compute the November 30 balance and enter it into the Work in Process T-account. (Record the transactions in the given order. Omit the "$" sign in your response.)

    Raw Materials

    Beg. Bal.
    ____________
    __________
    ____________

    Work in Process

    Beg. Bal.
    ____________
    __________
    ____________

    __________
    ____________

    __________
    ____________

    __________
    ____________

    End. Bal.
    ____________

    Finished Goods

    Beg. Bal.
    ____________

    __________
    ____________

    Manufacturing Overhead

    __________
    ____________
    __________
    ____________

    __________
    ____________

    __________
    ____________

    Salaries & Wages Payable

    __________
    ____________

    Accounts Payable

    __________
    ____________

    --------------------------------------------------------------------------------

    Requirement 3:

    How much of the balance at December 31 in the Work in Process inventory account consists of costs charged to Job 106? Job 107? (Omit the "$" sign in your response.)

    Job 106
    Job 107
    Total

    Direct materials
    $
    ____________
    $
    ____________
    $
    ____________

    Direct labor

    ____________

    ____________

    ____________

    Manufacturing overhead

    ____________

    ____________

    ____________

    Total cost
    $
    ____________
    $
    ____________
    $
    ____________

    --------------------------------------------------------------------------------
    P3_22_id2

    P3_22_id4

    P3_22_id8

    P3_22_id10

    --------------------------------------------------------------------------------

    © BrainMass Inc. brainmass.com October 9, 2019, 11:09 pm ad1c9bdddf
    https://brainmass.com/business/management-accounting/apply-over-head-cost-246632

    Attachments

    Solution Summary

    Apply over head costs for managerial accounting.

    $2.19