Apply over head cost for managerial accounting

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

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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.
__________

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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

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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.
__________
____________

__________

____________

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E3_4_id6

E3_4_id8

E3_4_id12

E3_4_id14

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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

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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

$
____________

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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

?

?

?

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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

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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

__________
____________

__________
____________

__________

____________

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(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

__________
____________

__________
____________

__________

____________

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(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

__________
____________

__________

____________

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(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

__________
____________

__________

____________

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(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

__________
____________

__________

____________

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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

__________
____________

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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
$
____________
$
____________
$
____________

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P3_22_id2

P3_22_id4

P3_22_id8

P3_22_id10

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