cost o goods manufacturing.docx

ACG 2071 Managerial AccountingProduct Costing and Cost Flows - Sample Problems forChs 28-34Answers appear inred.DRAFT

Problem 1- The balance sheet dated December 31, 2003, has a balance in the Finished Goods Inventory account of $26,200.The December 31, 2004, balance sheet has a balance in the Finished Goods Inventory account of $24,000. Work in Process Inventory account has a beginning balance of $20,000 and an ending balance of $30,000.If the cost of goods manufactured is $340,000, how much is cost of goods sold?Beginning FG inventory$ 26,200

+ CGM340,000

= Available366,200

- Ending FG inventory(24,000)

= Cost of goods sold$342,200

Problem 2-Alex Companys Work in Process Inventory account has a beginning balance of $60,000 and an ending balance of $50,000.Current manufacturing costs total $200,000. How much iscost of goods manufactured?$60,000 + $200,000 - $50,000 = $210,000

Problem3Hernandez, Inc. manufactures calculators. The company employs an actual costing system. During May, Hernandezs transactions included the following:Direct labor cost incurred$5,400

Total manufacturing overhead cost6,650

Direct materials purchased11,500

Raw materials inventory, beginning160

Raw materials inventory, ending280

Sales23,000

Selling expenses2,100

Work in process inventory, beginning220

Work in process inventory, ending250

A.Brieflylistany additional information you need to calculate cost of goods sold for this company. (Be specific.)Beginning finished goods inventory and ending finished goods inventory (You have enough information to calculate cost of goods manufactured so you don't need to be told that amount.)B.How much is the cost of direct materials issued to production during May?Raw materials inventory, beginning$ 160


Less Raw materials inventory, ending (280)

Cost of direct materials issued to production$11,380

C.How much is cost of goods manufactured for May?Materials issued to production$11,380

Direct labor cost incurred5,400

Manufacturing overhead cost 6,650

Total manufacturing costs22,430

Add: Work in process inventory, beginning220

Less: Work in process inventory, ending (250)

Cost of Goods Manufacturing$23,400

Problem4Culvyhouse Company uses an actual product costing system. It reported the following amounts for 2003:Raw materials purchased$72,000Beginning work-in-process inventory$21,000

Direct materials used70,000Ending work-in-process inventory16,000

Indirect materials used4,000Selling and administrative expensesincurred23,000

Direct labor used66,000Other manufacturing overhead costsincurred18,000

Indirect direct labor used7,000Beginning finished goods inventory6,000

Ending finished goods inventory9,000

A. Calculate the cost of goods manufactured.Cost of direct materials used$70,000

Cost of direct labor used66,000

Cost of MOH:$18,000 + $4,000 + $7,00029,000

Total manufacturing costs$165,000

Add beginning WIP21,000

Less ending WIP(16,000)

Cost of goods manufactured$170,000

B.Calculate cost of goods sold.Beginning FG inventory$6,000

Add CGM (part A)170,000

Less ending FG inventory(9,000)


Problem 5-Listed below are selected changes due to various transactions in the manufacturing process using anactual costing system. Identify whichaccount is changed as a result of each action listed in items 1 through 10 below by printing the code of the account(s) in the space provided.Some changes may have more than one answer.Accounts

RM - Raw Materials Inventory

FG - Finished Goods Inventory

WIP - Work-in-Process Inventory

MOH - Manufacturing Overhead

CGS - Cost of Goods Sold

AnswersChanges

WIP1. Increases when manufacturing overhead is incurred

WIP2. Increases when indirect materials are transferred to production

RM3. Increases when raw materials are purchased on account.

RM4. Decreases when direct materials are used in production

WIP5. Increases when direct labor costs are incurred

FG6. Increases when goods are finished.

WIP7. Decreases when goods are finished.

WIP8. Increases when indirect labor costs are incurred

FG9.Decreases when goods are sold.

CGS10. Increases when goods are sold.

Problem6- Norris, Inc. manufactures calculators. Norris uses an actual costing system. During June, Norriss transactions and accounts included the following:Work in process inventory, beginning$8,800Sales$42,000

Work in process inventory, ending7,500Direct labor cost (3,100 hours)55,000

Indirect materials issued from Supplies3,600Raw materials purchased143,500

Raw materials inventory, beginning4,600Finished goods inventory, beginning12,300

Raw materials inventory, ending5,800Finished goods inventory, ending11,600

Total manufacturing overhead incurred49,600.

A. How much is the cost of direct materials issued to production during June?Beginning inventory$ 4,600

+ Raw material purchases143,500

= Available148,100

Less ending rawmaterials (5,800)

= Cost of materials used$142,300

B. Calculate the cost of goods manufactured.MATERIALS:

Beginning inventory$ 4,600

+ Raw material purchases 143,500

=Available148,100

Less ending raw materials (5,800)


LABOR 55,000

OVERHEAD INCURRED 49,600

MANUFACTURING COSTS 246,900


Less ending work in process(7,500)


C. How much is the cost of inventory on the May 31stbalance sheet?Raw materials$ 4,600

Work in process8,800

Finished goods12,300

Total inventory at May 31st$25,700

Problem7- Heath Company uses an actual product costing system. The company reported the following amounts for 2003:Raw materials purchased$120,000Direct labor used $44,000

Beginning raw materials inventory 16,000Manufacturing overhead costsincurred36,000

Ending raw materials inventory 5,000Selling and administrative expenses21,000

Beginning finished goods inventory11,000Beginning work-in-process inventory17,000

Ending finished goods inventory8,000Ending work-in-process inventory16,000

A. Calculate the cost of materials used in production.Beginning raw materials inventory $ 16,000

Raw materials purchased120,000

= Materials available for use$136,000

Less ending raw materials inventory 5,000

= Materials used in production$131,000

B. Calculate the cost of goods manufactured.Materials used in production (part A)$131,000

Direct labor used 44,000

Manufacturing overhead costs incurred 36,000


Add beginning work in process17,000



Problem 8-Peters, Inc. manufactures homework machines. It uses an actual costing system. Peter's keeps a 'Supplies' account for it's indirect materials. During June, Peters transactions and accounts included the following:Finished goods inventory, ending$11,600Sales$324,000

Finished goods inventory, beginning12,300Direct labor cost72,400

Indirect materials issued to production3,200Direct materials purchased178,000

General administrative expenses9,400Work in process inventory, ending12,800

Raw materials inventory, ending7,700Work in process inventory, beginning10,500

Raw materials inventory, beginning5,100Total manufacturing overhead incurred56,100

A. How much is cost of goods manufactured?Beginning raw materials inventory$5,100



Less ending raw materials inventory(7,700)



Manufacturing overhead costs incurred 56,100





B. Calculate the cost of goods soldBeginning finished goods$12,300

Cost of goods manufactured301,600

Less ending finished goods inventory(11.600)


C. How much will the company report as product costs on the June 30th balance sheet? Raw materials$11,600


Finished goods 7,700

= Total inventory at 6-30-03$32,100

Problem 9-The manufacturing operations of Honcho, Inc. had the following balances for the month of March:Inventories3/1/033/31/03

Raw Materials10,00012,000

Work in process6,0007,000

Finished goods30,00022,000

f Honcho transferred $38,000 of completed goods out of work in process during March, how much was the amount of the cost of goods sold?Amounts transferred out of work in process are moved into finished goods as 'cost of goods manufactured'. Beginning finished goods plus cost of goods manufactured less ending finished goods = cost of goods sold $30,000 + $38,000 - $22,000 = $46,000

Problem10 -Saman, Inc. manufactures coasters and uses an actual costing system. During August, Samans accounts included the following balances and transactions:Work in process, beginning$25,200

Work in process, ending27,600

Finished goods beginning7,300

Finished goods, ending6,800

Administrative expenses12,000


Materials purchased78,000

Raw materials, beginning3,300

Direct materials used76,400

Manufacturing overhead cost incurred20,100

Sales167,000

Marketing expenses11,000

A. How much is ending raw materials at August 31Beginning inventory$ 3,300

+ Material purchases 78,000

- Direct materials used (76,400)

= Ending raw materials$4,900

B. How much is cost of goods manufactured?Direct materials$76,400

Direct labor20,400

Manufacturing overhead20,100





C. How much is cost of goods sold?Beginning FG inventory$7,300

Add CGM (part B)114,500



Problem 11Deegan, Inc. manufactures weather machines and uses an actual costing system. During June, Deegans accounts included the following balances and transactions:Raw materials inventory, beginning$700Direct materials purchased$45,000

Raw materials inventory, ending4,850Direct labor cost incurred16,400

Manufacturing overhead costincurred9,500Administrative expenses13,000

Marketing expenses11,000Work in process inventory, beginning7,800

Sales98,000Work in process inventory, ending6,600

A.A. How much is the cost of direct materials issued to production during June?$40,850Raw materials inventory, beginning$700


Goods available45,700

Less raw materials inventory, ending (4,850)


B. How much is cost of goods manufactured?$67,950Direct materials used in production (from part A)$40,850


Manufacturing overhead costincurred 9,500


Add: Work in process inventory, beginning7,800

Less: Work in process inventory, ending(6,600)

Cost of Goods Manufactured$67,950

C. Brieflylistany additional information you need to calculate cost of goods sold for this company. (Be specific.)Beginning finished goods inventory and ending finished goods inventoryNote that you already have cost of good manufactured from part B, so it should not be listed here as an additional item needed.

Problem 12Cost of goods manufactured equals $44,000 for 2006. Finished goods inventory is $2,000 at the beginning of the year and $5,500 at the end of the year. Total manufacturing overhead is $4,500. Beginning and ending work in process for 2006 are $4,000 and $5,000 respectively. How much is cost of goods sold for the year?Beginning FG + CGM - CGS = ending FG$2,000 + $44,000 - x = $5,500CGS =$40,500

Problem13Sound Company uses an actual costing system. It reported the following amounts for May, 2006:Raw materials purchased$254,000

Beginning raw materials inventory 12,000

Ending raw materials inventory 7,900

Beginning finished goods inventory7,400

Ending finished goods inventory8,000

Direct labor incurred51,000

Selling and administrative expenses22,300

Actual manufacturing overhead costs36,800

Beginning work-in-process inventory15,100

Ending work-in-process inventory12,000

A. Calculate the cost of direct materials used in production.Beginning raw materials inventory$ 12,000





B. Calculate the cost of goods manufactured.Beginning work in process$15,100

Rawmaterials used in production (part A)$258,100


Manufacturing overhead costs 36,800

Total manufacturing costs added$346,100



C.How much will Sound report as total inventories on its May 31 balance sheet?Raw materials$7,900



Total inventory at May 31$27,900

Problem 14- Eng Manufacturing Company developed the following data:Beginning work in process inventory$10,000


Actual manufacturing overhead85,000


Ending work in process15,000

How much are total manufacturing costs for the period?Total manufacturing costs for the period are the costs incurred that are added during the current period:Beginning work in process(given)$ 10,000

Total current manufacturing costs??

Less ending work in process(given)(15,000)

Cost of goods manufactured(given)$295,000

Since the beginning and ending WIP amounts and CGM is known, work backwards to determine how much the total current period manufacturing costs are: $10,000 - $15,000 - $295,000 = $300,000. Note that DM, DL, and MOH are added together to get total current manufacturing costs for the period.

Problem15- The accounting records of Cinotti Manufacturing Company include the following information:Dec. 31, 2004Dec. 31, 2003

Work in process inventory$ 15,000$ 12,000

Finished goods inventory 45,000 51,000

Materials purchased 331,000

Raw materials inventory ? 24,000

Direct materials used 325,000

Manufacturing overhead incurred 132,000

Direct labor 120,000

Selling expenses 70,000

Cinotti uses an actual cost system. Calculate the following:1. Raw materials inventory at 12-31-04 Beginning raw materials inventory$ 24,000



Less materials used in production(325,000)

Ending raw materials inventory$30,000

2. Total manufacturing costs added to Work in Process Inventory during 2004Materials used in production$325,000


Manufacturing overhead costs 132,000

Total manufacturing costs added to WIP$577,000

3. Cost of goods manufactured during 2004 Total manufacturing costs added (From part 2)$577,000




4.Total inventories on Cinottis December 31, 2004 balance sheet Raw materials (from part 1)$30,000



Total inventory at 6-30-03$90,000

5. Assume CGM is $500,000. How much is cost of goods sold for 2004?Beginning finished goods$51,000


Less ending finished goods inventory(45,000)

Cost of goods sold$506,000

Problem 16- Earl, Inc. manufactures baseballs uses a normal costing system and allocates overhead based on direct labor cost. During June, Earls accounts included the following balances and transactions: Manufacturing overhead cost incurred$ 33,300Raw materials, beginning$ 11,500

Marketing expenses27,000Finished goods beginning8,400

Administrative expenses24,000Finished goods, ending9,600

Direct labor cost incurred32,000Work in process, beginning21,500

Cost of materials purchased138,600Work in process, ending18,900

Direct materials used in production143,000Sales285,000

A. How much is ending raw materials at June 30$7,100Raw materials inventory, beginning$11,500



Less cost of direct materials issued to production(143,000)

Raw materials inventory, ending$ 7,100

B. How much is cost of goods manufactured for June?$210,900Direct materials used in production$143,000


Manufacturing overhead cost 33,300





C. How much is cost of good sold?Beginning finished goods$8,400

Cost of goods manufactured (part B)210,900



Problem 17 -The manufacturing operations of Darden, Inc. had the following balances for the month of March:Inventories3/1/033/31/03

Raw Materials$10,000$12,000

Work in process 6,000 7,000

Finished goods30,000 22,000

If Darden reported cost of goods sold totaling $46,000 in March, how much did ittransfer out of workin process as completed goods?Amounts transferred out of work in process are moved into finished goods as 'cost of goods manufactured'. Beginning finished goods plus cost of goods manufactured less ending finished goods = cost of goods sold $30,000 + ? - $22,000 = $46,000 so CGM = $38,000

Problem 18 -Alderson Bucket Company incurred the following costs: $100 of plastic, 25 hours at $10 per hour, $50 of indirect materials, $50 of indirect labor, $200 for advertising, and $75 to ship the buckets to the customers. How much are total product costs?$100 + (25 x $10) + $50 + $50 = $450; Advertising and shipping to customers (delivery costs) are period costs since they do not relate to the production of the products.

Problem 20 -Top of the Head Comb Company incurred the costs listed below during May to manufacture combs. The company uses a JIT inventory system.Plastic resin$3,500

Factory machine blades (replaced daily)500

Cost to ship to customers600

Production supervisors salary2,100

Product advertising costs1,200

Production labor -42 hours at $20 per hour

Calculate total product costs assuming 10,000 combs are produced.Plastic resin$3,500

Factory machine blades (replaced daily)500

Production supervisors salary2,100

Production labor -42 hours at $20 per hour840

Total product costs$6,940

Cost to ship to customers is delivery expense, a product cost. Product advertising costs are period costs as well. Note that these costs are no part of the cost of getting the products ready to sell.How much is the cost per comb?$6,940/10,000 = $0.694 each

Problem 21Mitchell, Inc. manufactures calculators and employs an actual costing system. During March, Mitchells transactions and accounts included the following:Sales$320,000Raw materials inventory, beginning$6,500

Raw materials acquired (cash paid)135,000Raw materials inventory, ending5,800

Raw materials received on account30,000Finished goods inventory, beginning11,200

Direct labor cost incurred42,000Finished goods inventory, ending12,400

Cost to deliver products to customers800Work in process inventory, beg.18,700

Total manufacturing overhead incurred72,000Work in process inventory, ending19,700

A. How much is the cost of direct materials transferred to production during June?Raw materials inventory, beginning$ 6,500

Rawmaterials purchased ($135,000 + $30,000)165,000


Less raw materials inventory, ending (5,800)


B. Calculate the cost of goods manufactured.Direct materials used in production (from part A)$165,700


Manufacturing overhead costincurred72,000





Problem 22- CT, Inc. reported $22,000 in work in process at June 1 and $21,300 at June 30. Finished goods was $4,500 on June 1 and $5,100 on June 30. Direct material used in June totaled $88,000. CT incurred $46,000 for Junes manufacturing overhead. Cost of goods manufactured totaled $199,000. How much are total manufacturing costs for June?WIP

Beginning 22,000

199,000CGM

Mfg. costsX

Ending 21,300

Beginning WIP + Total manufacturing costs - CGM = Ending WIP$22,000 + X - $199,000 = $21,300; so Total Mfg. Costs =$198,300

Problem 23 -Zimmerman, Inc. manufactures calculators and employs an actual costing system. During June, Zimmermans transactions and accounts included the following:Raw materials acquired (cash paid)$117,000

Raw materials received on account12,000


Total manufacturing overhead incurred72,800

Raw materials inventory, beginning$6,500

Raw materials inventory, ending5,800

Finished goods inventory, beginning11,200

Finished goods inventory, ending12,400

Work in process inventory, beginning26,000

Work in process inventory, ending22,000

A. How much is the cost of direct materials transferred to production during June? Raw materials inventory, beginning$ 6,500

Direct materials purchased ($117K + $12K)129,000

Less Raw materials inventory, ending (5,800)


B. Calculate the cost of goods manufactured.Materials issued to production (part A)$129,700


Manufacturing overhead cost72,800



Less: Work in process inventory, ending (22,000)


Problem25-The following information has been collected from Green Companys accounting records for the month of April:Direct materials added to Work in Process Inventory$ 160,000

Indirect materials added to Manufacturing Overhead40,000

Direct labor added to Work in Process Inventory150,000

Indirect labor added to Manufacturing Overhead65,000

Manufacturing overhead added to Work in Process Inventory100,000

Depreciation Expense included in Manufacturing Overhead50,000

Beginning work in process inventory22,000


How much is the balance of Work in Process inventory if Green uses a normal costing method?Direct materials added to Work in Process Inventory$ 160,000

Direct labor added to Work in Process Inventory150,000

Manufacturing overhead added to Work in Process Inventory100,000

Total manufacturing costs added$410,000


Less CGM(415,000

Ending work in process$17,000

Problem26Hernandez, Inc. manufactures calculators. The company employs anormal costing system. Any amount of over or underapplied overhead is immaterial. During May, Hernandezs transactions included the following:Direct labor cost incurred$5,400

Total manufacturing overhead costapplied6,650

Total manufacturing overhead cost incurred6,300


Indirect materials issued to production1,100



Sales23,000




A.How much is the cost of direct materials issued to production during May?Raw materials inventory, beginning$ 160


Indirect materials issued(1,100)



B.How much is cost of goods manufactured for May?Materials issued to production$10,280


Manufacturing overhead cost applied 6,650


Add: Work in process inventory, beginning220

Less: Work in process inventory, ending (250)


Note: Indirect materials issued to production are considered manufacturing overhead costs and as such, are already included in the total manufacturing overhead cost amount given.

Problem 27Culvyhouse Company uses a normal product costing system.Any amount of over or underapplied overhead is immaterial.It reported the following amounts for 2003:Raw materials purchased$72,000Beginning work-in-process inventory$21,000


Indirect materials used4,000Selling and administrative expensesincurred23,000

Direct labor used66,000Other manufacturing overhead costsincurred17,000


Manufacturing overhead applied29,000Ending finished goods inventory9,000

A. Calculate the cost of goods manufactured.Cost of direct materials used$70,000

Cost of direct labor used66,000

Cost of MOH applied29,000

Manufacturing costs$165,000




B.Calculate cost of goods sold. Ignore any over or underapplied overhead.Beginning FG inventory$6,000

Add CGM (part A)170,000



Problem 28-Listed below are selected changes due to various transactions in the manufacturing process using anormal costing system. Identify whichaccount is changed as a result of each action listed in items 1 through 10 below by printing the code of the account(s) in the space provided.Some changes may have more than one answer.Accounts

RM - Raw Materials Inventory

FG - Finished Goods Inventory

WIP - Work-in-Process Inventory

MOH - Manufacturing Overhead

CGS - Cost of Goods Sold

AnswersChanges

MOH1. Increases when manufacturing overhead is incurred

MOH2. Increases when indirect materials are transferred to production

RM3. Increases when raw materials are purchased on account.

RM4. Decreases when direct materials are used in production

WIP5. Increases when direct labor costs are incurred

FG6. Increases when goods are finished.

WIP7. Decreases when goods are finished.

MOH8. Increases when indirect labor costs are incurred

FG9.Decreases when goods are sold.

CGS10. Increases when goods are sold.

WIP11. Increases when manufacturing overhead is applied

MOH12. Decreases when manufacturing overhead is applied

Problem29- Norris, Inc. manufactures calculators. Norris uses a normal costing system.Any amount of over or underapplied overhead is immaterial.During June, Norriss transactions and accounts included the following:Work in process inventory, beginning$8,800Sales$42,000

Work in process inventory, ending7,500Direct labor cost (3,100 hours)55,000

Indirect materials issued to production3,600Raw materials purchased143,500

Raw materials inventory, beginning4,600Finished goods inventory, beginning12,300

Raw materials inventory, ending5,800Finished goods inventory, ending11,600

Total manufacturing overhead applied49,600Total manufacturing overhead incurred49,000

A. How much is the cost of direct materials issued to production during June?Beginning inventory$ 4,600


- Indirect materials issued(3,600)

= Available144,500

Less ending rawmaterials (5,800)


B. Calculate the cost of goods manufactured.MATERIALS:

Beginning inventory$ 4,600



=Available144,500

Less ending raw materials (5,800)


LABOR 55,000

OVERHEAD APPLIED 49,600

MANUFACTURING COSTS 243,300




C. How much is the cost of inventory on the May 31stbalance sheet?Raw materials$ 4,600



Total inventory at May 31st$25,700

Problem 30- Heath Company uses a normal product costing system.Any amount of over or underapplied overhead is immaterial.The company applies manufacturing overhead based on 80% of direct labor cost. The company reported the following amounts for 2003:Raw materials purchased$120,000Direct labor used $44,000

Beginning raw materials inventory 16,000Manufacturing overhead costsincurred36,000

Ending raw materials inventory 5,000Selling and administrative expenses21,000

Beginning finished goods inventory11,000Beginning work-in-process inventory17,000

Ending finished goods inventory8,000Ending work-in-process inventory16,000

A. Calculate the cost of materials used in production.Beginning raw materials inventory $ 16,000



Less ending raw materials inventory 5,000


B. Calculate the cost of goods manufactured.Materials used in production (part A)$131,000


Manufacturing overhead costs applied (80%*44,000) 35,200





Problem 31-Peters, Inc. manufactures homework machines.It uses a normal costing system.Any amount of over or underapplied overhead is immaterial. Actual manufacturing overhead for the year is $55,500.Overhead is applied based on direct labor cost. During June, Peters transactions and accounts included the following:Finished goods inventory, ending$11,600Sales$324,000

Finished goods inventory, beginning12,300Direct labor cost72,400

Indirect materials issued to production3,200Direct materials purchased178,000

General administrative expenses9,400Work in process inventory, ending12,800

Raw materials inventory, ending4,500Work in process inventory, beginning10,500

Raw materials inventory, beginning5,100Total manufacturing overheadapplied56,100

A. How much is cost of goods manufactured?Beginning raw materials inventory$5,100



Less indirect materials used(3,200)




Manufacturing overhead costs applied 56,100





B. Calculate the cost of goods soldafter adjustment for over/underapplied overhead.Beginning finished goods$12,300


Less ending finished goods inventory(11.600)


Overapplied overhead ($55,500-$56,100) (600)

Adjusted cost of goods sold$301,700

C. How much is totalinventoryon the June 30th balance sheet? Raw materials$11,600



= Total inventory at 6-30-03$28,900

Problem 32-The manufacturing operations of Honcho, Inc. had the following balances for the month of March:Inventories3/1/033/31/03

Raw Materials$10,000$12,000

Work in process6,0007,000

Finished goods30,00022,000

If Honcho transferred $38,000 of completed goods out of work in process during March, what was the amount of the cost of goods sold?Amounts transferred out of work in process are moved into finished goods as 'cost of goods manufactured'. Beginning finished goods plus cost of goods manufactured less ending finished goods = cost of goods sold $30,000 + $38,000 - $22,000 = $46,000

Problem33 -Under Company estimates the following overhead costs for 2003:Equipment depreciation$ 30,000

Equipment maintenance64,000

Factory management salaries150,000

Factory rent 50,000

Total manufacturing overhead$294,000

Under Company incurred the following costs for 2003 for job 23:Direct material$80,000

Direct labor60,000

Other jobs incurred $320,000 of direct labor. Under Company is also budgeting $350,000 in direct labor costs and 20,000 machine hours for 2003. Actual manufacturing overhead for 2003 was $300,000.A. Calculate the predetermined overhead rate using direct labor costs as the allocation base.$294,000/$350,000 = $ 0.84 per direct labor dollarB.Which of the allocation bases is preferred?Why?Since most of the overhead costs are related to equipment, machine hours is thepreferred allocation base.C. How much overhead will Under apply to job 23? $0.84 x $60,000 = $50,400D. What is the total cost of job 23?$50,400 + $80,000 + $60,000 = $190.400

Problem 34 -Stranahan Company allocates overhead based on machine hours. Estimated overhead costs for the year total $217,000 and the company estimates that it will use 31,000 machine hours during the year.Actual overhead for the year was $220,000 and the company used 30,000 machine hours.If Job 45 requires 1,000 machine hours, how much overhead will be allocated to Job 45?$217,000/31,000 machine hours = $7.00 per machine hour$7.00 per machine hour * 1,000 machine hours = $7,000

Problem 35 -Fane Company estimates that its employees will work 80,000 direct labor hours during the coming year.Total overhead costs for the year are estimated to be $1,000,000 and the direct labor costs are expected to be $1,300,000.Actual overhead for the year was $980,000 and the company used 82,000 direct labor hours.If the company allocates overhead based on direct labor hours, what is the predetermined overhead rate?$1,000,000/80,000 = $12.50 per direct labor hour

Problem 36 -Hernandez, Inc. manufactures calculators. The company uses a normal costing system. The company allocates overhead at $25 per direct labor hour. Over or underapplied overhead is not material. During May, Hernandezs transactions included the following:Direct labor cost incurred@ $20 an hour$5,400

Manufacturing overhead cost incurred6,800



Manufacturing overhead cost applied6,650



Sales23,000




A.Brieflylistany additional information you need to calculate cost of goods sold for this company. (Be specific.)Beginning finished goods inventory and ending finished goods inventory (You have enough information to calculate cost of goods manufactured so you don't need that amount.)B.How much is the cost of direct materials issued to production during May?Raw materials inventory, beginning$ 160





C. How much overhead would be applied during May? Direct labor cost/Cost per hour = number of direct labor hours incurred $5,400/$20 = 270 hours Applied = 270 hours x $25 = $6,750 D. How much is over or underapplied overhead for May? $6,750 - $6,800 = $50 underapplied

Problem 37 -At the end of the year, Deary Company had the following balances in selected accounts related to its job cost system:Raw Materials Inventory$40,000Work in Process Inventory$100,000

Finished Goods60,000Cost of Goods Sold800,000

Information concerning manufacturing overhead and labor for the year follows:Actual manufacturing overhead$290,000Direct labor hours incurred15,600

Estimated manufacturing overhead$300,000Direct labor hours estimated15,000

Actual direct labor cost per hour$17MOH applied based onDirect labor hours

A.Calculate the predetermined manufacturing overhead rate.Estimated MOH/ Est. DL hours =

$300,000/15,000 =$20 per DL hour

Note: This is the number we use to apply MOH to jobs as we are working on them.in this case, for each direct labor hour our people work, we add $20 for MOH costs.B.How much overhead did Deary apply to jobs during the year?Must be applied based on the estimated cost per DL hour calculated in part A since we dont know how much the actual cost will be until the end of the period.$20 x 15,600 hours =$312,000

C.How much is CGS after Deary properlyallocatesany under or over-applied manufacturing overhead?Step 1: Determine how much is over or underapplied:

Actual amount in the MOH expense account$290,000

Applied (from part B)(this is how much we took out of the MOH expense account)312,000

Overapplied (a negative balance left in the MOH expense account)($22,000)

[NOTE: This amount cannot stay therewe must take it out and move it all to CGS.

CGS = $800,000 - $22,000 = $778,000

Problem 38 -Saman, Inc. manufactures coasters and allocates overhead based on direct labor cost. Saman uses a normal cost system. During August, Samans accounts included the following balances and transactions:Work in process, beginning$25,200

Work in process, ending27,600

Finished goods beginning7,300

Finished goods, ending6,800

Administrative expenses12,000


Materials purchased78,000

Raw materials, beginning3,300




Sales167,000

Marketing expenses11,000

Manufacturing overhead cost incurred21,,000

A. How much is ending raw materials at August 31Beginning inventory$ 3,300

+ Material purchases 78,000


- Direct materials used (76,400)

= Ending raw materials$2,700

B. How much is cost of goods manufactured?Direct materials$76,400

Direct labor20,400

Manufacturing overhead20,100





C. How much is cost of goods sold? (Be sure to consider the under or overapplied overhead.)Beginning FG inventory$7,300

Add CGM (part B)114,500



Underappplied($21,000-$20,100)900

Adjusted cost of goods sold$115.900

Problem 39 -Hager Inc. applies overhead based on direct labor cost using a normal cost system. The company estimated the following annual amounts:Estimated manufacturing overhead$42,000

Estimated direct labor1,600 hours at $15 per hour

Actual amounts for the year were:Actual manufacturing overhead$44,000

Actual direct labor1,550 hours at $16 per hour

A. How much is the predetermined overhead rate?Estimated manufacturing overhead/Estimated direct labor cost =$42,000/(1,600*$15) =$1.75 per direct labor dollarB. How much overhead was applied during the year?Overhead rate x DL$ incurred =$1.75 x [1,550*$16] =$43,400C.Determine the amount of over or underapplied overhead.Applied - Actual = $43,400 - $44,000 =$600 underapplied

Problem 40 -Jiffy Fabricators applies overhead based on direct labor cost. The company provided the following annual amounts:Estimated direct labor2,000 hours at $12.50 per hour

Actual direct labor1,900 hours at $13 per hour

Estimated manufacturing overhead$30,000

Actual manufacturing overhead$31,000

A.How much overhead was applied during the year?$29,640Overhead application rate = Estimated MOH cost/Estimated DL$= $30,000/[2,000*$12.50] = $1.20 per DL$ Overhead applied = $1.20 x [1,900*$13] =$29,640B. Determine the amount of over or underapplied overhead.$1,360 Under appliedApplied MOHActual MOH = $29,640$31,000 = $1,360 underappliedRemember me saying that some of you would forget that 'estimated MOH' does not appear anywhere in the accounting records?

Problem 41 -Deegan, Inc. manufactures bliggles and allocates overhead based on direct labor cost. During June, Deegans accounts included the following balances and transactions:Raw materials inventory, beginning$700Direct materials purchased$45,000

Raw materials inventory, ending850Direct labor cost incurred16,400

Manufacturing overhead cost applied9,500Indirect materials issued to production4,000

Marketing expenses11,000Work in process inventory, beginning7,800

Manufacturing overhead cost incurred9,000Work in process inventory, ending6,600

Sales98,000Administrative expenses13,000

Under and overapplied overhead are considered immaterial.A.How much is the cost of direct materials issued to production during June?$40,850Raw materials inventory, beginning$700



Less raw materials inventory, ending (850)

Less indirect materials to production(4,000)


B. How much is cost of goods manufactured?$67,950Direct materials used in production (from part A)$40,850







Note: Indirect materials issued to production are considered manufacturing overhead costs and as such, are already included in actual manufacturing overhead.

Problem 42 -The accounting records of Cinotti Manufacturing Company include the following information:Dec. 31, 2004Dec. 31, 2003




Raw materials inventory? 24,000





Manufacturing overhead is applied at a rate of 110% of direct labor cost. Calculate the following:1. Raw materials inventory at 12-31-04 Beginning raw materials inventory$ 24,000



Less materials used in production(325,000)

Less ending raw materials inventory$30,000

2. Total manufacturing costs added to Work in Process Inventory during 2004Materials used in production$325,000


Manufacturing overhead costs applied (110%*$120,000 132,000

Total manufacturing costs added to WIP$577,000

3. Cost of goods manufactured during 2004 Total manufacturing costs added (From part 2)$577,000




4.Total inventories on Cinottis December 31, 2004 balance sheet Raw materials (from part 1)$30,000



Total inventory$90,000

5. Assume CGM is $500,000. How much is cost of goods sold for 2004?Beginning finished goods$51,000




Problem 43 -Earl, Inc. manufactures baseballs and allocates overhead based on direct labor cost. During June, Earls accounts included the following balances and transactions: Manufacturing overhead cost applied$33,300Raw materials, beginning$ 11,500

Indirect materials issued to production1,400Finished goods beginning8,400

Administrative expenses24,000Finished goods, ending9,600

Direct labor cost incurred32,000Work in process, beginning21,500

Cost of materials purchased140,000Work in process, ending18,900

Direct materials used in production143,000Marketing expenses27,000

Manufacturing overhead cost incurred35,000Sales285,000

Under and overapplied overhead are considered immaterial. Ignore over/ underapplied elimination in parts B and C. A. How much is ending raw materials at June 30Raw materials inventory, beginning$11,500



Lesscost of direct materials issued to production(143,000)

Less indirect materials to production(1,400)

Raw materials inventory, ending$ 7,100

B. How much is cost of goods manufactured for June?Direct materials used in production$143,000







C. How much is cost of good sold?Beginning finished goods$8,400

Cost of goods manufactured (part B)210,900



D. Is this company using an actual or normal costing system? Normal costing

Problem 44 -Walker Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for May of 2005 as follows:Actual manufacturing overhead$163,800


Direct labor incurred2,500 hours @ $22 = $55,000

Direct labor estimated2,600 hours @ $21 = $54,600

A. How much is the manufacturing overhead rate?Estimated manufacturing overhead/estimated direct labor hours =$158,600 / 2,600 hours =$61.00 per DL hourB. How much overhead did Walker apply during the year?Overhead rate times actual DL hours =$61 x 2,500 =$152,500C. How much is over or underapplied overhead at May 31?Actual overhead - applied overhead =$163,800 - $152,500 =$11,300 underapplied

Problem 45 -Harmon Company began jobs 35, 36, 37, and 38 during July. At the beginning of July, jobs 31, 33, and 34 were in production, while jobs 30 and 32 were completed and waiting to be shipped to customers. Jobs 31, 33, 34, 36, and 37 were completed during July. Jobs 30, 31, 32, 34, and 36 were shipped to customers during July.Which jobs were completed and transferred out during July?31, 33, 34, 36, 37Which jobs are in work in process at July 31?35 and 38Which jobs are in finished goods at July 31?33 and 37Calculations:WIP beginning = 31, 33, 34Jobs added = 35, 36, 37, 38Jobs worked on = 31, 33, 34, 35, 36, 37, 38Less jobs completed and transferred out = 31, 33, 34, 36, 37Ending jobs remaining in WIP = 35 and 38Ending jobs remaining in FG = 33 and 37

Problem 46-The underapplied balance of the Manufacturing Overhead account is $30,000. The amount is considered material. The ending balances of Raw materials, Work in Process, Finished Goods, and Cost of Goods Sold are $10,000, $25,000, $50,000, and $425,000, respectively. What amount of the underapplied balance should be allocated to Cost of Goods Sold?Since the amount is considered material, the underapplied amount must be allocated to the three accounts with overhead in them:Work in Process, Finished Goods, and Cost of Goods Sold, based on their balances:Work in Process$25,000

Finished Goods50,000

Cost of Goods Sold425,000

Total$500,000

Allocated to CGS: $425,000/$500,000 x $30,000 =$25,500

Problem 47-Hoart Company applies overhead based on direct labor hours and calculated an overhead rate of $2. Job 55 used $500 of direct materials, 100 machine hours, $750 of direct labor. The labor rate per hour is $15. How much is the cost of job 55?Number of hours = $750/$15 = 50 DL hoursDM + DL + MOH = $500 + $750 + 50*$2 = $1,350Problem 24Gottberg Company bases its predetermined overhead rates on machine-hours. At the beginning of the year, the company estimated its manufacturing overhead for the year would be $56,000 and there would be a total of 40,000 machine-hours. Actual manufacturing overhead for year amounted to $58,000 and the actual machine-hours totaled 44,800. How much manufacturing overhead was applied for the year?Applied at the rate of: $56,000/40,000 = $1.40 per machine hour;$1.40 x 44,800 MH = $62,720; Actual amounts cannot be used to determine the rate because they are not known until the end of the year.

Problem 48 -Moss Company applies manufacturing overhead based on direct labor hours. It provided the following information from its accounting records for 2003:Expected production30,000 labor hours

Actual production28,000 labor hours

Budgeted overhead$1,500,000

Actual overhead$1,450,000

Jobs 102 & 103 are completed during the period.A.What is the overhead application rate?$1,500,000/30,000 = $50 per hourB. How much overhead will be applied to job 103 if its total labor cost was $4,320 and labor is $18 per hour?Number of labor hours = $4,320/$18 = 240 hoursOverhead applied = 240 hours*$50 = $12,000

Problem 49-Sat Companys factory overhead account showed a $8,000 underapplied overhead balance on December 31. Other accounts showed the following balances at year end:Raw materials$100,000

Work in Process40,000



Which will be the balances of each account listed below after disposing the $8,000?Cost of Goods Sold$700,000 + $8,000 =$708,000Work in Process$40,000 no changeFinished Goods$60,000 no changeWork in Process$40,000 no changeUnderapplied overhead is moved to cost of goods sold since most of the overhead cost would likely be in that account by year end.

Problem 50 -Benny Company allocates overhead at $4 per direct labor dollar. Job 52 required 6 cases of direct materials at a cost of $6 per case and took employees of 5 hours to complete. Employees earn $10 per hour. How much is the total cost of Job 52?DM = 6 x $6 = $36DL = $10 x 5 hrs. = $50MOH = $4 x $50 = $200Total cost = $286

Problem 51 -Clinton's Furniture Company estimates its annual factory overhead to be $47,000. The company assigns factory overhead using the number of pieces produced. Clinton budgets annual production at 70,000 pieces of glassware.At year-end, you find out Clinton incurred $52,000 of factory overhead for the year.Suppose the company produced 75,000 pieces in 2002.A. What is the total amount of factory overhead applied to production for the year?($47,000/70,000) x 75,000 = $50,357B. How much is factory overhead under- or over-applied?Answer: $50,357 - $52,000 = $1,643 underapplied

Problem 52-Actual manufacturing overhead costs $120,000; estimated manufacturing overhead costs $100,000; actual machine hours 25,000; and estimated machine hours 20,000. The only cost driver is machine hours.A. Using job order costing, how much is the 2002 predetermined overhead application rate?$100,000/20,000 = $5.00 per hourB. How much isthe amount of manufacturing overhead allocated to jobs during 2003?$100,000/20,000 = $5.00/machine hour; $5.00 x 25,000 = $125,000

Problem 53 -Dougan, Inc. allocates overhead based on a predetermined overhead rate of $16.00 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4 pounds of direct material at a cost of $30.00 per pound. It is estimated it will take employees a total of 20 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24?Direct materials (4 x $30)$120

Direct labor ($12 x 20)240

Manufacturing overhead ($16 x 20)320

Total job cost$680

Problem 54- Duckworth Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $100,000 and direct labor hours would be 10,000. The actual figures for the year were $110,000 for manufacturing overhead and 10,500 direct labor hours. How much is over or underapplied overhead for the year?Actual manufacturing overhead$110,000

Applied overhead:

Rate x DL hours incurred =

[$100,000/10,000] x 10,500 =105,000

Underapplied overhead$5,000

Problem 55- Carr Company has the following estimated costs for next year:Direct materials$30,000Salary of production supervisor$70,000

Direct labor110,000Indirect materials10,000

Factory operating costs144,000Advertising expense32,000

Carr applies manufacturing overhead on the basis of machine hours. Carr estimates that 20,000 direct labor and 32,000 machine hours will be worked during the year.Actualdirect labor and machine hours for the year were 19,600 and 33,000, respectively. Actual overhead was $226,000 for the year. How much overhead is over or underapplied at year end?Overhead rate = Estimated Overhead/Estimated Activity= [$144,000 + $70,000 + $10,000]/32,000 = $7.00 per machine hourApplied = $7.00 x 33,000 machine hours = $231,000Overapplied overhead = Actual overhead - applied overhead = $226,000 - $231,000 = $5,000

Problem 56- Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:Actual manufacturing overhead$150,000Direct labor hours incurred4,800

Estimated manufacturing overhead$140,000Direct labor hours estimated5,000

How should the manufacturing overhead allocation rate be calculated?$140,000 5,000 = $28

Problem 57 -The following amounts were reported by Winkler Company before adjusting its overapplied manufacturing overhead of $20,000.Raw Materials Inventory$40,000 Work in Process Inventory$100,000

Finished Goods 60,000 Cost of Goods Sold840,000

How much will Winkler report as cost of goods sold after it disposes of its overapplied overhead?Since overhead is overapplied, too much was added to the product accounts. To remove overapplied, you must subtract. Since the amount is immaterial, the entire amount is removed from cost of goods sold: $840,000 - $20,000 = $820,000.

Problem 58 -On Monday, Janu Flowers purchases roses costing $8,000. On Tuesday, Janu uses $5,000 of the flowers to begin preparing for Friday evening's Lovers Dance. On Wednesday, Janu paid $1,500 of labor for its employees for working on the job. Overhead is applied at 80% of direct labor cost.What is the ending account balance of Finished Goods after these transactions when the job is complete?Materials = $5,000 + Labor $1,500 + Mfg. overhead ($1,500*80%) $1,200 = $7,700

Problem 59 -During 2003 Lawson Manufacturing expected to produce 100,000 units with $300,000 of overhead, $500,000 of material, and $200,000 in labor. Actual production was 110,000 units with an overhead cost of $280,000, $550,000 in materials used; and $220,000 in labor. All of the goods were completed and transferred to Finished Goods.A.What amount was transferred to Finished Goods?Overhead is applied based on the estimates of overhead and activity: $300,000/100,000 = $3 per unit produced;As activity occurs (i.e., units are produced) the company applies overhead. In this case, the company adds $3 to WIP each time one unit is produced. Total applied: 110,000 units x $3 = $330,000 applied. Total cost transferred: DM + DL + OH applied = $550,000 + $220,000 + $330,000 = $1,100,000B.How much is the amount of over/under applied overhead?Applied = $330,000 less actual $280,000 = $50,000 overapplied

Problem 60 -Hernandez, Inc. pays its employees $12 per hour. It allocates overhead at $3 per direct labor hour. Job R45 required 5 pounds of direct materials at a cost of $5 per pound and took employees of 2 hours to complete. How much is the total cost of Job R45?DM + DL + MOH = total cost[5 x $5] + [2 x $12] + [2 x $3] = $55

Problem 61 -Builder Bob Company allocates overhead at $9 per direct labor hour. Job A45 required 5 boxes of direct materials at a cost of $30 per box and took employees 12 hours to complete. Employees earn $15 per hour. How much is the total cost of Job A45?DM + DL + MOH = (5 x $30) + ($15 x 12) + ($9 x 12) = $438

Problem 62 -Holl Company incurred direct materials costs of $30,000 during the year. Manufacturing overhead applied was $28,000 and is applied based on direct labor costs. The predetermined overhead rate is 70%. How much are Holl Companys total manufacturing costs for the year?$28,000 = .70(DL); so DL = $40,000;DM + DL + MOH = total manufacturing costs for the year$30,000 + $40,000 + $28,000 = $98,000

Problem 63-Bell Manufacturing assigns overhead based on direct labor dollars. The company incurred the following for Job B22: $2,500 for direct materials and 20 hours of direct labor. Employees are paid $11 per hour. The following estimates were made by the company at the beginning of the year for 2004 operations:Expected annual direct labor hours10,000

Expected annual direct labor cost$250,000

Expected manufacturing overhead costs$300,000

How much is overhead applied to job B22?Rate = $300,000/$250,000 = $1.20 per DL dollar;Overhead applied at $1.20 for each dollar of labor incurred on the job: $1.20 x [$11 x 20] = $264

Problem 64- Zing Manufacturing assigns overhead based on direct labor dollars. The company incurred the following for job A24: $200 for direct materials and 30 hours of direct labor. Employees are paid $12 per hour. The predetermined overhead rate was calculated at $1.10 based on direct labor dollars. Estimated manufacturing overhead for the year was $38,000. The company expected to complete 100 jobs during the year. How much is the total cost of job A24?Direct materials$200

Direct labor [30 hours x $12]360

MOH [$1.10 x $360 of labor]396

Total job cost$956

Problem 65-McCargoRepair has the job 26 ($4,000) in beginning work in process, and job 25 ($3,000) in beginning finished goods. Additional job costs incurred during the year were: Job 27 $5,000, Job 28 $4,500, and Job 29 $5,500. Jobs 26, 27 and 29 are completed. Jobs 25, 26 and 29 are sold. What is the cost of ending finished goods?Only job 27;Cost = $5,000Jobs 26, 27, and 29 were transferred from WIP into FG to join job 25 during the year. Jobs (25, 26, and 29) were moved out to CGS when sold. This leaves only job 27 in FG.

Problem 66- McLeod Companys factory overhead account showed a $4,000 overapplied balance on December 31. Other accounts showed the following balances at year end:Raw materials$25,000




Determine the balances of the accounts listed below after disposing the $4,000.A.Cost of Goods Sold= $450,000 - $4,000 = $446,000B.Work in Process= $20,000 -C.Finished Goods= $30,000D. Raw Materials= $25,000

Problem 67-Timber Company uses a predetermined overhead rate of $7.00 per machine hour. If estimated overhead costs were $350,000, overhead costs incurred were $360,000, estimated machine hours were 50,000, and machine hours worked were 51,000 this year, how much is applied overhead?Overhead is applied based on the actual activity. The activity for the $7 rate is 'machine hour.' Every time one machine hour is incurred, $7 is added as MOH to WIP. The rate was calculated by taking total estimated MOH costs divided by estimated machine hours:$350,000/50,000 = $7. Applied = $7 x 51,000 = $357,000

Problem 68- Fibbe Company estimated it would incur $65,000 of manufacturing overhead during 2004. An analysis indicates that overhead applied totaled $68,000. The actual manufacturing overhead cost during the year was $66,000. How much is over or under applied overhead?Actual manufacturing overhead costs increase the MOH expense account. Applied MOH costs decrease it. The difference is over or under applied. Note that the estimated MOH amount does not get recorded into the accounting records.Actual MOH costs($66,000)

Applied MOH 68,000

Overapplied overhead$2,000

Problem 69 -Calky, Inc. completed Job No. G23 during 2004. The job cost sheet listed the following:Direct materials$15,000

Direct labor$5,000

Manufacturing overhead$10,000

Units produced1,000 units

Units sold800 units

How much is the cost of the finished goods on hand from this job?Accrual basis accounting tells us that the costs to produce are the costs that become inventory:Costs of all 1,000 units = DM + DL + MOH = $15,000 + $5,000 + $10,000 = $30,000Cost per unit to produce = $30,000/1,000 = $30 per unitCost of goods on hand (ending inventory) = $30 x (1,000 - 800) = $6,000

Problem 70- Puerto Company allocates overhead based on a predetermined overhead rate of $3.00 per direct labor hour.Job 51 required 2 cases of direct material at a cost of $10.00 per case and took employees who earn $12.00 per hour a total of 3 hours to complete. What is the total cost of Job 51?DM + DL + MOH = [2 cases x $10] + [3 hrs x $12] + [3 hrs. x $3] = $65

Problem 71 Singleton Company applies overhead based on an overhead rate of $0.25 per direct labor dollar.Job 24 used $800 of direct materials, 620 machine hours, and 150 hours of direct labor. The labor rate per hour is $18. How much is the cost of job 24?Direct materials$800

Direct labor (150*$18)2,700

MOH ($2,700*$0.25)675

Cost of job 24$4,175

Problem 72-Hang Companys factory overhead account showed a $9,000 underapplied overhead balance on December 31. Other accounts showed the following balances at year end:Raw materials$100,000



Cost of Goods Sold2,200,000

How much will cost of goods sold be after disposing of the $9,000?

Cost of goods sold adjusted balance = $2,200,000 + $9,000 =$2,209,000

Underapplied overhead is added to the accounts to which it is allocated because not enough overhead was allocated.

Problem 73-Yetter Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for May of 2005 as follows:Actual manufacturing overhead$180,000


Direct labor incurred4,000 hours @ $23 = $92,000


A. How much is the predetermined overhead rate?Since the actual amount of overhead and actual direct labor incurred is not known until the end of the period, we must use estimated amounts to determine the POHR. Estimated MOH/ Estimated DLH = $188,600/$4,100 =$46 per Direct labor hourB. How much overhead should be applied in total during May?Each time one direct labor hour is incurred, we must apply (add) $46 of manufacturing overhead. $46/DLH x 4,000 hours =$184,000C.How much is over or underapplied overhead at May 31? Actual MOH - Applied MOH = Over/Underapplied $180,000 - $184,000 =$4,000 overapplied

Problem 74Zimmerman, Inc. manufactures calculators and employs a normal costing system. During June, Zimmermans transactions and accounts included the following:Raw materials acquired (cash paid)$124,000

Raw materials received on account12,000



Total manufacturing overhead applied72,800

Total manufacturing overhead incurred82,000

Raw materials inventory, beginning$6,500

Raw materials inventory, ending5,800

Finished goods inventory, beginning11,200

Finished goods inventory, ending12,400

Work in process inventory, beginning26,000

Work in process inventory, ending22,000

A. How much is the cost of direct materials transferred to production during June? Raw materials inventory, beginning$ 6,500

Direct materials purchased ($124K + $12K)136,000




B. Calculate the cost of goods manufactured.Materials issued to production (part A)$129,700







Because this is job costing and a normal costing system is used, only applied overhead is added to WIP.

Problem 75 -Niebaum Company uses a normal product costing system. Any amount of over or underapplied overhead is material. Niebaum's accounts showed underappliedoverhead of $5,000 at December 31. Other accounts showed the following balances at year end:Raw materials$30,000



Sales revenue830,000

Cost of goods sold620,000

Calculate gross profit after the disposal of under or overapplied manufacturing overhead.Sales$830,000

Cost of goods sold:$620,000

Adjustment for underapplied overhead5,000

New cost of goods sold625,000

Gross Profit$205,000

Problem 77 -Dasani, Inc. considers any over or underapplied overhead to be immaterial. The company reported the following amounts for 2006:Raw materials purchased$88,000Beginning work-in-process inventory$17,000


Indirect materials used6,000Selling and administrative expenses incurred16,000

Direct labor used42,000Other manufacturing overhead costs incurred36,000


Manufacturing overhead applied45,000Ending finished goods inventory10,000

A.Calculatetotal manufacturing costsif the company uses an actual costing system.Direct materialsused$83,000

Direct labor cost42,000

Manufacturing overhead:

Indirect materials used6,000

Indirect direct labor used5,000

Other manufacturing overhead costs incurred36,000


Note that an actual costing system allocates the actual manufacturing overhead costs directly to WIP.B.Calculate the cost of goods manufactured assuming anormalcosting system.Direct materialsused$83,000

Direct labor cost42,000

Manufacturing overhead applied45,000


Add Beginning WIP17,000

Less Ending WIP(19,000)

CGM$168,000

Problem 78 -Winfrey, Inc. manufactures calculators. The company employs a normal costing system and keep all materials in a materials storeroom. Wallaces related transactions for June follow:Direct labor cost incurred$17,800Work in process inventory, beginning$10,200

Materials purchased on account42,500Work in process inventory, ending11,100

Materials purchased for cash11,500Raw materials inventory, beginning1,400

Payment made for materials purchased in May3,300Raw materials inventory, ending1,150

Total manufacturing overhead cost23,500Indirect materials issued to production2,200

How much is the cost of direct materials issued to production during June?Raw materials inventory, beginning$ 1,400

Direct materials purchased ($42,500 + $11,500)54,000




Problem 79 -Daniels Manufacturing used 30 hours of direct labor and $340 of direct materials for job 66. Employees are paid $13 per hour. Fringe benefits cost $3 per hour. The overhead rate was calculated at $24 based on direct labor hour. Estimated manufacturing overhead for the year was $52,000. The company expected to complete 60 jobs during the year. How much is the total cost of job 66?Direct materials$ 340

Direct labor: ($13 + $3)*30480

MOH applied: $24*30 DLH720

Total job cost$1,540

Problem 80Salonga Company applies manufacturing overhead based on direct labor dollars. Information for June follows:Direct labor incurred5,100 hours @ $20 = $102,000


Actual manufacturing overhead$172,920


Direct materials incurred$234,000

A. How much is the manufacturing overhead rate? Estimated MOH / Estimated DL$ = $178.160 / $104,800 = $1.70 per DL$Note that both amounts are estimated because this rate is created at the beginning of the accounting period and actual amounts are not know.B. How much overhead did Salonga apply during June?MOH rate * Actual DL$ = $1.70*$102,000 = $173,400C.1.Post all necessary amounts to the t-account in which you would find the amount of over or underapplied overhead at June 30.2. Label the account with the correct name.3. Calculate the balance and label if over or underapplied.Manufacturing Overhead

172,920173,400

480 Overapplied

D.Brieflystate the two reasons that manufacturing overhead isapplied.1-Timely information is needed for decision makingand the actual OH cost is not know until the end of the period.2- It is not feasible nor in other cases possible to trace indirect costs to products or services.

Problem 82 -The accounting records of Cinotti Manufacturing Company include the following information:Dec. 31, 2004Dec. 31, 2003




Raw materials inventory ? 24,000





Cinotti uses an actual cost system. Calculate the following: A. Raw materials inventory at 12-31-04 B. Total manufacturing costs added to Work in Process Inventory during 2004A. Similar to the calculation of a bank balance--beginning plus increases less decreases equals ending balance.Raw materials inventory, beginning$24,000

Add Materials purchased331,000

Less direct materials used(325,000)

Raw materials inventory, ending$30,000

B. Total manufacturing costs consist of the three manufacturing costs incurred in production which are added to work in process during the year:Direct materials used $325,000



Total manufacturing costs incurred $577,000

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