PROBELM I:
1. A debit balance in the Manufacturing Overhead account at the end of an interim month means that
a. the balance should be reported as a current liability in the monthly balance sheet.
b. corrective action by management is necessary.
c. overhead has been under applied.
d. cost of goods sold should be credited on the monthly income statement.
The following data should be used for questions:
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Raw materials inventory, January 1
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$10,000
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Raw materials purchases
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$600,000
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Raw materials inventory, December 31
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15,000
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Direct labor
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230,000
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Work in process, January 1
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9,000
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MHO Factory utilities
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75,000
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Work in process, December 31
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5,000
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MOH Indirect labor
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25,000
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Finished goods, January 1
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16,000
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MOH Factory depreciation
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200,000
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Finished goods, December 31
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20,000
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Selling and administrative expenses
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210,000
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2. Direct materials used is
a. $630,000.
b. $610,000.
c. $600,000.
d. $595,000.
3. Total manufacturing cost added is
a. $1,130,000.
b. $1,127,000.
c. $1,030,000.
d. $1,340,000.
4. Cost of goods manufactured equals
a. $1,096,000.
b. $1,097,000.
c. $1,104,000.
d. $1,109,000.
5. The cost of goods sold is
a. $1,123,000.
b. $1,104,000.
c. $1,116,000.
d. $1,124,000.
PROBELM II - CLASSIFICATION OF COSTS AND EXPENSES
Instructions: Classify the following manufacturing costs and expenses incurred by Garcia Manufacturing Co., making soda drinks, by using the following code letters:
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1.
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Sale's commissions to employees
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6.
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Depreciation on delivery trucks
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2.
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Depreciation on factory equipment
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7.
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Factory insurance cost
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3.
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Promotions in a radio station
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8.
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Factory maintenance materials
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4.
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Syrup, alkaline water and sugar
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9.
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Wages of maintenance workers
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5.
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Rent on leased factory machinery
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10.
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Wages of mixing line workers
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PROBLEM III -Determine work in process and finished goods balances
Robles Manufacturing begins operations on October 1. Information from job cost sheets shows the following:
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Manufacturing Costs Assigned
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Job
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October
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November
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December
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A
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$14,600
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B
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$ 5,400
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$9,300
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C
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$ 3,200
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$5,800
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$5,800
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D
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$7,400
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$8,300
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E
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$4,400
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Job A was completed in October.
Job B was completed in November.
Job C was completed in December.
Each job was sold in the month following completion.
Instructions: Determine the following amounts:
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1
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Work in process inv. Oct 31
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4
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Finished goods inv. Nov 30
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2
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Finished goods inv. Oct 31
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5
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Work in process inv. Dec 31
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3
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Work in process inv. Nov 30
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6
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Finished goods inv. Dec 31
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PART IV - JOB ORDER COST ACCOUNTING ENTRIES
The ledger accounts of ROPRIN Company are presented below, with an identification number for each.
Instructions: Prepare appropriate job order cost system entries to record the data/events given below.
1. Cash 6. Manufacturing Overhead 11. Depreciation Expense
2. Accounts Receivable 7. Accounts Payable 12. Factory Labor
3. Raw Materials Inv. 8. Factory Wages Payable 13. Wages Expense
4. Work in Process Inv. 9. Accumulated Depreciation 14. Cost of Goods Sold
5. Finished Goods Inv. 10. Sales 15. Other Accounts
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Transaction Information for the Entry
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1. Incurred factory labor, $110,000.
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2. Charged direct labor to Job AA, $80,000.
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3. Purchased raw materials on account, $180,000.
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4. Charged direct materials to Job AA, $78,000.
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5. Recorded the remaining factory labor as indirect labor related to Job AA
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6. Incurred manufacturing overhead on account, $57,000.
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7. Recognized depreciation on factory equipment, $30,000.
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8. Charged overhead to Job AA at $1.25 for each direct labor dollar cost.
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9. Recorded completion of Job AA.
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10. Recorded cost of sales for Job AA.
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11. Recorded revenue from sale of Job AA on account, $425,000.
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12. Assume total actual overhead was $2,280,000 and total applied overhead was $2,230,000 for the year. Record the entry to close the MOH account and transfer the over or under applied overhead to Cost of Good Sold account.
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PROBLEM IV - JOB ORDER COST ACCOUNTING ENTRIES:
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GENERAL JOURNAL
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#
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ACCOUNTS DESCRIPTION
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DEBIT
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CREDIT
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1
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2
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3
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4
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5
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6
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7
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8
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9
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10
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11
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12
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Problem V. (20 Points) ROMALY, INC. has several processing departments. Costs charged to the Forming Department for December 2011 totaled $1,505,000 as follows:
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Work in Process, December 1
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Materials
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$ 103,400
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Conversion costs
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60,000
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$ 163,400
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Costs Added:
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Materials added
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$ 1,100,800
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Labor
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$ 100,000
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Manufacturing Overhead
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102,800
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Total Conversion Costs
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202,800
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Total Cost added
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1,303,600
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Total Department Costs
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$ 1,467,000
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Production records show that:
1. 60,000 units were in beginning work in process inventory
a. 25% complete as to materials costs
b. 70% complete as to conversion cost
2. 410,000 units were started into production
3. 40,000 units were in ending work in process inventory
a. 40% complete as to materials costs
b. 20% complete as to conversion costs.
Required:
a. Compute the physical unit flow, step 1.
b. Determine the equivalent units of production for materials and conversion costs, step 2.
c. Compute the unit cost of production, step 3.
d. Determine the costs to be assigned to the units transferred out and in process.
e. Prepare a production cost report for the Forming Department for the month of December.
Problem V: FOUR SPETS TO PREPARE PRODUCTION COST REPORT
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FORMING DEPARTMENT INFORMATION
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WIP, Dec/1 (Beginning Inventory)
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DIRECT MATERIALS: _____________Units X _____% COMPLETED
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CONVERSION COSTS: _____________Units X _____ %COMPLETED
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UNITS STARTED IN PRODUCTION DURING DECEMBER
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UNITS COMPLETED AND TRANSFERRED OUT TO PACKING
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WIP, Dec/31 (Ending Inventory)
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DIRECT MATERIALS: _____________Units X _____% COMPLETED
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CONVERSION COSTS: _____________Units X _____% COMPLETED
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C O S T S
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WIP, Dec/1 (Bebinning Inventory)
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DIRECT MATERIALS
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$
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CONVERSION COSTS
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TOTAL COST OF WIP, Dec/1 (Beginning Inventory)
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$
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COSTS ADDED DURING PRODUCTION IN DECEMBER
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DIRECT MATERIALS
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$
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CONVERSION COSTS (DL $_________ + MOH $__________)
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TOTAL COST ADDED IN DECEMBER
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TOTAL COST AS OF DECEMBER 31
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Part a. Compute the physical units flow (step 1).
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FORMING DEPARTMENT
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PHYSICAL UNITS TO BE ACCOUNTED FOR
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WIP, Dec 1 (Beginning Inventory)
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STARDED (TRANSFERRED) INTO PRODUCTION
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TOTAL UNITS
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COMPLETED AND TRANSFERRD OUT
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WIP, Dec 31 (Ending Inventory)
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TOTAL UNITS
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Part b. Determine the equivalent units of production for materials and conversion costs (step 2).
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FORMING DEPARTMENT
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EQUIVALENT UNITS
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MATERIAL
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CONVERSION COSTS
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UNITS TRANSFERRED OUT
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WIP, Dec 31 (Ending Inventory) MATERIALS
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WIP, Dec 31 (Ending Inventory)CONVERSION COST
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TOTAL EQUIVALENT UNITS
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Part c. Compute the unit cost of production (Sept 3).
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STEP 3: COMPUTE UNIT PRODUCTION COSTS
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FORMING DEPARTMENT
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M A T E R I A L C O S T S PER UNIT
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WIP, Dec 1 - (Beginning Inventory) Direct Material
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$
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Material Costs incurred or added into production during December
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Total Material Costs
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$
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TOTAL MATERIAL COSTS / EQUIVALENT UNITS = UNITS MATERIAL COST
$_____________ DIVIDIDO ENTRE ___________ = $________
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C O N V E R S I O N C O S T S PER UNIT
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WIP, Dec 1 - (Beginning Inventory) Conversion costs
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$
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Conversion costs incurred or added into production during December
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TOTAL CONVERSION COSTS
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$
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TOTAL CONVERSION COSTS / EQUIVALENT UNITS = UNIT CONVERSION COST
$__________ DIVIDIDO ENTRE ___________ = $_________
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MATERIAL UNIT COST
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$
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CONVERSION UNIT COST
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TOTAL MANUFACTURING UNIT COST
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$
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Part d. Determine the costs to be assigned to the units transferred out and in process (Step 4)
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FORMING DEPARTMENT
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C O S T RECONCILIATION REPORT
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COST ACCOUNTED FOR
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WIP, Dec 1 (Beginning Inventory)
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$
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STARTED INTO PRODUCTION
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TOTAL COSTS
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$
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COST ACCOUNTED FOR
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Completed & Transferred Out
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$
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WIP Ending Inventory- Dec 31 MATERIALS
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$
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WIP Ending Inventory- Dec31 CONVERSION COSTS
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TOTAL WIP Dec 31 (Ending Inventory)
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TOTAL COSTS
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$
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Part e. Prepare a production cost report for the Forming Department for the month of December.
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FORMING DEPARTMENT (28 Puntos)
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PRODUCTION COST REPORT
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FOR THE MONTH ENDED DECEMBER 31, 2011
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STEPS 1 AND 2
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PHYSICAL UNITS
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UNITS TO BE ACCOUNTED FOR
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STEP 1
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WIP, Dec 1 (Beginning Inventory)
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STARTED INTO PRODUCTION
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TOTAL UNITS
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STEP 2
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STEP 1
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EQUIVALENT UNITS
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UNITS TO BE ACCOUNTED FOR
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PHYSICAL UNITS
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MATERIALS
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CONVERSION COSTS
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TRANSFERRED OUT
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WIP, Dec 31 (Ending Inventory)
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TOTAL UNITS
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STEP 3
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U N I T C O S T S
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COSTS
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MATERIALS
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CONVERSION COSTS
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TOTAL
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TOTAL COSTS AS OF DECEMBER
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(a)
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$
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$
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$
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EQUIVALENT UNITS
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(b)
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UNIT COST a/b
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$
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$
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$
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STEP 4
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C O S T ACCOUNTED FOR
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WIP, Dec 1 (Beginning Inventory)
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$
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STARTED INTO PRODUCTION
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TOTAL COST FOR THE MONTH OF DECEMBER
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$
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COST RECONCILIATION SCHEDULE
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Completed & Transferred Out
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$
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WIP Ending Inventory-Dec 31-Direct Material Costs(Equivalent Units)
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$
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WIP Ending Inventory-Dec 31-Conversion Costs (Equivalent Units)
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Total Costs WIP Ending Inventory-Dec 31 (Based on equivalent units)
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TOTAL COST FOR THE MONTH OF DECEMBER 2011
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$
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PROBLEM VI:
JOKARY Company manufactures two models of TV: (1) Regular TV (2) Custom TV. The Regular TV model is a high volume product and the Custom TV model is a low volume product. The following information was provided by management:
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Regular TV
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Custom TV
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Total
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Quantity
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Per Unit
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Quantity
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Per Unit
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Volume of Production in units
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50,000
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10,000
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60,000
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Direct Material per unit
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$100.00
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$400.00
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Direct Labor Hours per Unit
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5.0
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5.0
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Total Direct Labor (DL) Hours
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250,000
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50,000
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300,000
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Direct Labor Cost per Unit
|
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$10.00
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$10.00
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Total MHO
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$1,650,000
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Predetermined MHO Per DL Hours
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$5.50*
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*$1,650,000 / 300,000 = $5.50
Management identified six activities cost pools and related cost drivers and accumulated overhead by cost pool as follows:
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Activity Cost Pools
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Cost Drivers
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Estimated Overhead
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Expected Use of Cost Drivers
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Expected Use of Drivers by Product
|
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Regular TV
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Custom TV
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Purchasing
|
Orders
|
$ 200,000
|
500
|
170
|
330
|
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Receiving
|
Pounds
|
161,000
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140,000
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58,000
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82,000
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Forming
|
Parts
|
581,000
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830,000
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415,000
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415,000
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Inspecting
|
Inspections
|
208,000
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130,000
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82,000
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48,000
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Painting
|
Units
|
240,000
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120,000
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80,000
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40,000
|
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Warehousing
|
Cartons
|
260,000
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10,000
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7,000
|
3,000
|
|
|
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$1,650,000
|
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|
|
Instructions:
a) Compute the total unit cost of each product under the traditional product costing.
b) Compute the activity based overhead rates (per cost driver).
c) Assign each activity's overhead cost pool to each product based on the use of cost drivers. (Include a computation of overhead cost per unit, rounding to the nearest cent.)
d) Compute the total cost per unit for each product under ABC.
b. Computation of each product unit cost-traditional costing.
|
Manufacturing Cost
|
Products
|
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Regular TV Model
|
Custom TV Model
|
|
Direct materials
|
|
|
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Direct Labor
|
|
|
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Overhead
|
|
|
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Total unit cost
|
|
|
c. Computation of the activity based overhead rates (per cost driver).
|
Activity Cost Pools
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Total Estimated Overhead
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Expected Use of Cost Drivers
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Activity Based Overhead Rate
|
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Purchasing
|
$ 200,000
|
500
|
|
|
Receiving
|
161,000
|
140,000
|
|
|
Forming
|
581,000
|
830,000
|
|
|
Inspecting
|
208,000
|
130,000
|
|
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Painting
|
240,000
|
120,000
|
|
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Warehousing
|
260,000
|
12,100
|
|
|
|
$1,650,000
|
|
|
d. Assign each activity's overhead cost pool to each product based on the use of cost drivers.
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Activity Cost Pools
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Regular TV Model
|
Custom TV Model
|
|
Expected Use of Drivers
|
Activity-
Based
Overhead
Rates
|
Cost
Assigned
|
Expected
Use of
Drivers
|
Activity-
Based
Overhead
Rates
|
Cost
Assigned
|
|
Purchasing
|
170
|
|
|
330
|
|
|
|
Receiving
|
58,000
|
|
|
82,000
|
|
|
|
Forming
|
415,000
|
|
|
415,000
|
|
|
|
Inspecting
|
82,000
|
|
|
48,000
|
|
|
|
Painting
|
80,000
|
|
|
40,000
|
|
|
|
Warehousing
|
8,040
|
|
|
4,060
|
|
|
|
Total Cost Assigned
|
|
|
|
|
|
Units Produced
|
|
|
|
|
Overhead Cost Per Unit
|
|
|
|
e. Compute the total cost per unit for each product under ABC.
|
ABC Manufacturing Cost
|
Regular TV Model
|
Custom TV Model
|
|
Direct Materials
|
|
|
|
Direct Labor
|
|
|
|
Overhead
|
|
|
|
Total cost per unit
|
|
|