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Accounting 23rd Edition Carl S. Warren - Solutions
=+the beginning of the period. The ending work in process inventory was 6,770 tons. How many tons were started and completed during the period?
=+PE 20-1A Job order vs. process costing obj. 1 EE 20-1 p. 900 Practice Exercises 928 Chapter 20 Process Cost Systems Atlas Steel Company has two departments, Casting and Rolling. In the Rolling Department, ingots from the Casting Department are rolled into steel sheet. The Rolling Department
=+CD manufacturing Steel manufacturing
=+Business consulting Plastic manufacturing
=+Designer clothes manufacturing Home construction
=+Which of the following industries would typically use job order costing, and which would typically use process costing?
=+15. How does just-in-time processing differ from the conventional manufacturing process?
=+14. What is just-in-time processing?
=+13. How is “yield” determined for a process manufacturer?
=+12. How are cost of production reports used for controlling and improving operations?
=+11. What is the most important purpose of the cost of production report?
=+10. How is actual factory overhead accounted for in a process manufacturer?
=+Blending and Filling. All direct materials are introduced in Blending from the materials store area. What is included in the cost transferred to Filling?
=+9. Rameriz Company is a process manufacturer with two production departments,
=+8. What is the purpose for determining the cost per equivalent unit?
=+7. Why is the cost per equivalent unit often determined separately for direct materials and conversion costs?
=+6. What is meant by the term equivalent units?
=+5. What are the four steps for determining the cost of goods completed and the ending inventory?
=+4. What are transferred-out materials?
=+How are these items treated in a process cost system and why?
=+3. In a job order cost system, direct labor and factory overhead applied are debited to individual jobs.
=+2. In job order cost accounting, the three elements of manufacturing cost are charged directly to job orders. Why is it not necessary to charge manufacturing costs in process cost accounting to job orders?
=+1. Which type of cost system, process or job order, would be best suited for each of the following: (a) TV assembler, (b) building contractor, (c) automobile repair shop, (d)paper manufacturer, (e) custom jewelry manufacturer? Give reasons for your answers.
=+Cost per unit $ 2.65 $ 2.75 $ 2.63 $ 2.70 $ 2.75 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Which of the following statements best interprets this information?A. The total costs are out of control.B. The product costs have steadily increased because
=+Electricity 2,500 3,000 3,500 4,000 4,700 Maintenance 4,000 3,750 3,400 3,000 2,800 ________ ________ ________ ________ ________ Total costs $ 26,500 $24,750 $28,900 $ 27,000 $27,500 Pounds produced ________ 10,000 ________ 9,000 ________ ________ ________ 11,000 10,000 10,000
=+5. Information from the accounting system revealed the following:Day 1 Day 2 Day 3 Day 4 Day 5 Materials $20,000 $18,000 $22,000 $ 20,000 $ 20,000
=+4. Based on the data presented in Question 3, what is the conversion cost per equivalent unit?A. $10 C. $25 B. $15 D. $32
=+If 500 units were one-fourth completed at May 31, 5,500 units were completed during May, and inventories are costed by the first-in, first-out method, what was the number of equivalent units of production with respect to conversion costs for May?A. 4,500 C. 5,500 B. 4,875 D. 6,000
=+3. Information relating to production in Department A for May is as follows:May 1 Balance, 1,000 units, 3⁄4 completed $22,150 31 Direct materials, 5,000 units 75,000 31 Direct labor 32,500 31 Factory overhead 16,250
=+2. There were 2,000 pounds in process at the beginning of the period in the Packing Department.Packing received 24,000 pounds from the Blending Department during the month, of which 3,000 pounds were in process at the end of the month. How many pounds were completed and transferred to finished
=+1. For which of the following businesses would the process cost system be most appropriate?A. Custom furniture manufacturer B. Commercial building contractor C. Crude oil refinery D. Automobile repair shop
=+1. Prepare a cost of production report for the Mixing Department. 2. Determine the cost of goods sold (indicate number of units and unit costs). 3. Determine the finished goods inventory, May 31, 2010.
=+Southern Aggregate Company manufactures concrete by a series of four processes. All materials are introduced in Crushing. From Crushing, the materials pass through Sifting, Baking, and Mixing, emerging as finished concrete. All inventories are costed by the first-in, first-out method. The
=+3. Which predetermined overhead rate would you recommend? Discuss the basis for your recommendation.
=+2. For each of the past five years, determine the over- or underapplied overhead, based on the two predetermined overhead rates developed in part (1).
=+1. Calculate a predetermined factory overhead rate for each alternative base, assuming that rates would have been determined by relating the amount of factory overhead for the past five years to the base.
=+Applied overhead 706,000 866,000 675,000 642,000 611,000 __________ __________ __________ __________ __________(Over-) underapplied overhead $ 4,000 $ (6,000) $ 5,000 $ (2,000) $ 1,000 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________
=+An analysis of the company’s operations and use of the current overhead rate (direct materials usage) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered:2010 2009 2008 2007 2006 Actual
=+SA 19-3 Factory overhead rate Chapter 19 Job Order Costing 895 As an assistant cost accountant for Spears Industries, you have been assigned to review the activity base for the predetermined factory overhead rate. The president, Jessica Romo, has expressed concern that the over- or underapplied
=+3. What do you think is a possible solution?
=+2. What did the engineer mean about the large overhead rate being a disadvantage when placing bids and seeking new business?
=+1. What is the engineer’s concern about the overhead rate going “up and up”?
=+“design out” direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won’t be surprised if next year the rate is $3,000 per direct labor hour. I’m also concerned because small errors in our
=+SA 19-4 Recording manufacturing costs Digital-Tech Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $2,500 per direct labor hour. The design engineer thinks that this is
=+2. Why would Duke accept the journal entries if they were for administrative costs?
=+1. Play the role of Duke and answer Jack’s questions.
=+Duke: That’s a very unusual way to record our factory wages and depreciation for the month.Jack: What do you mean? This is exactly the way we were taught to record wages and depreciation in school. You know, debit an expense and credit Cash or payables, or in the case of depreciation, credit
=+2. How would you interpret what has happened in light of your analysis and the interviews?Jack Thule just began working as a cost accountant for Toad Industries Inc., which manufactures gift items. Jack is preparing to record summary journal entries for the month.Jack begins by recording the
=+1. Analyze the two job cost sheets, and identify why the unit costs have changed for the Z-15 backhoe buckets. Complete the following schedule to help you in your analysis:Input Quantity per Input Quantity per Item Unit—Job 110 Unit—Job 130 Steel Foundry labor Welding labor
=+Management is concerned with the increase in unit costs over the months from April to October. To understand what has occurred, management interviewed the purchasing manager and quality manager.Purchasing Manager: Prices have been holding steady for our raw materials during the first half of the
=+Total materials ________$106,400 Direct Labor Direct Direct labor Hours Labor Rate Amount Foundry 500 15.00 $ 7,500 Welding 700 17.00 11,900 Shipping 200 12.00 2,400 _____ ________ Total direct labor 1,400 $21,800 _____ ________ _____ Direct Total Factory Labor Overhead Cost Rate Amount
=+Unit cost _______$ 3,811 _______ Job 130 Item: 40 Z-15 backhoe buckets Direct Materials Direct Materials Materials: Quantity Price Amount Steel (tons) 140 $740.00 $103,600 Steel components 700 4.00 2,800 ________
=+Item: 20 Z-15 backhoe buckets Direct Materials Direct Materials Materials: Quantity Price Amount Steel (tons) 60 $750.00 $45,000 Steel components (pieces) 350 4.00 1,400 _______ Total materials $46,400 _______ Direct Labor Direct Direct labor Hours Labor Rate Amount Foundry 220 $15.00 $
=+SA 19-2 Job order decision making and rate deficiencies Chapter 19 Job Order Costing 893 Job 110
=+SA 19-1 Managerial analysis Antelope Company makes attachments,such as backhoes and grader and bulldozer blades, for construction equipment. The company uses a job order cost system. Management is concerned about cost performance and evaluates the job cost sheets to learn more about the cost
=+The controller of the plant of Berry Building Supplies prepared a graph of the unit costs from the job cost reports for Product X-S1. The graph appeared as follows:How would you interpret this information? What further information would you request?Unit Cost$40$35$30$25$20$15$10$5$0 Day of Week
=+2. Determine the balances in the finished goods and work in process inventory for the Movie Design 2010 product on December 31, 2010.Special Activities
=+1. Prepare an annual income statement for the Movie Design 2010 product, including supporting calculations, from the information above.
=+vFactory overhead cost is applied to jobs at the rate of $2,500 per copy machine hour.There were an additional 4,000 copied CDs, packaging, and manuals waiting to be assembled on December 31, 2010.Instructions
=+Total completed production was 100,000 units during the year. Other information is as follows:Number of software units sold in 2010 80,000 Wholesale price per unit $100
=+The sales force is compensated by a 15% commission on the wholesale price for all sales.
=+After the program is copied onto the CD, the CD is brought to assembly, where assembly personnel pack the CD and manual for shipping. The direct labor cost for this work is $0.50 per unit.The completed packages are then sold to retail outlets through a sales force.
=+2. Determine the August 31 balances for each of the inventory accounts and factory overhead.892 Chapter 19 Job Order Costing The actual production process for the software product is fairly straightforward.First, blank CDs are brought to a CD copying machine. The copying machine requires 1 hour
=+1. Determine the missing amounts associated with each letter. Provide supporting calculations by completing a table with the following headings:Aug. 1 Cost of Job Work in Direct Direct Factory Total Unit Units Goods No. Quantity Process Materials Labor Overhead Cost Cost Sold Sold
=+d. Customer jobs completed and units sold in August were as follows:Completed Units Sold Job No. Style in August in August Job 101 T-100 X 80 Job 102 T-300 X 110 Job 103 T-200 0 Job 104 S-100 X 115 Job 105 S-200 X 160 Job 106 T-400 0 Instructions
=+c. The August 1 Work in Process balance consisted of two jobs, as follows:Work in Process, Job No. Style August 1 Job 101 T-100 $ 8,000 Job 102 T-300 14,000 _______ Total $22,000 _______ _______
=+b. Factory overhead is applied to each job at a rate of 50% of direct labor cost.
=+a. Materials and direct labor were applied to six jobs in August:Job No. Style Quantity Direct Materials Direct Labor No. 101 T-100 100 $ 25,000 $ 18,000 No. 102 T-300 125 32,000 22,000 No. 103 T-200 150 40,000 34,000 No. 104 S-100 125 20,000 12,500 No. 105 S-200 200 36,000 20,000 No. 106 T-400
=+✔ 1. Income from operations,$2,400,000 Wages Payable Aug. 31 Wages incurred 120,000 Factory Overhead Aug. 1 Balance 8,000 Aug. 31 Factory overhead applied (E)31 Indirect labor (H)31 Indirect materials 4,500 31 Other overhead 51,500 In addition, the following information is available:
=+My Way uses a job order cost system to accumulate costs associated with each software title. Direct materials unit costs are as follows:Blank CD $ 2.50 Packaging 4.00 Manual 12.00 ______ Total $18.50 ______ ______ PR 19-5B Flow of costs and income statement obj. 2
=+PR 19-4B Analyzing manufacturing cost accounts obj. 2✔ G. $205,970 Chapter 19 Job Order Costing 891 My Way Software Inc. is a designer, manufacturer, and distributor of software for microcomputers. A new product, Movie Design 2010, was released for production and distribution in early 2010. In
=+31 Direct labor (D)31 Factory overhead applied (E)Finished Goods Aug. 1 Balance 0 Aug. 31 Cost of goods sold (G)31 Completed jobs (F)
=+Aug. 1 Balance (B) Aug. 31 Completed jobs (F)31 Materials (C)
=+PR 19-3B Job order cost sheet objs. 2, 3 Davidson Outdoor Equipment Company manufactures kayaks in a wide variety of lengths and styles. The following incomplete ledger accounts refer to transactions that are summarized for August:Materials Aug. 1 Balance 32,000 Aug. 31 Requisitions (A)31
=+2. Assign number 10-110 to the job, record the costs incurred, and complete the job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that two meters of materials were spoiled, the factory overhead rate has been proved to
=+The related materials requisitions and time tickets are summarized as follows:Materials Requisition No. Description Amount 210 10 meters at $14 $140 212 16 meters at $14 224 Time Ticket No. Description Amount H16 6 hours at $18 $108 H21 10 hours at $18 180 Instructions 1. Complete that portion of
=+Total estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,087.80 _________ _________ On June 4, the chairs and couch were picked up from the residence of Ted Austin, 409 Patterson St., Vienna, with a commitment to return them on August 5. The job was
=+Estimated direct materials:24 meters at $14 per meter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 336.00 Estimated direct labor:14 hours at $18 per hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252.00 Estimated factory overhead (75% of direct labor
=+PR 19-1B Entries for costs in a job order cost system obj. 2 890 Chapter 19 Job Order Costing If the working papers correlating with the textbook are not used, omit Problem 19-3B.Terry Furniture Company refinishes and reupholsters furniture. Terry uses a job order cost system. When a prospective
=+h. Jobs completed, $965,000.i. Cost of goods sold, $952,400.Instructions
=+g. Factory overhead costs applied to jobs, $261,500.
=+e. Prepaid expenses expired for factory overhead were $12,500; for selling expenses,$14,500; and for administrative expenses, $8,500.f. Depreciation of factory equipment was $25,300; of office equipment, $31,600; and of store equipment, $7,600.
=+d. Other costs incurred on account were for factory overhead, $125,400; selling expenses, $87,500; and administrative expenses, $56,400.
=+PR 19-2B Entries and schedules for unfinished jobs and completed jobs obj. 2✔ 3. Work in Process balance, $59,925 Problems Series B Dacher Company uses a job order cost system. The following data summarize the operations related to production for October:a. Materials purchased on account,
=+e. The factory overhead rate is $25 per machine hour. Machine hours used:Job Machine Hours No. 401 108 No. 402 110 No. 403 86 No. 404 160 No. 405 109 No. 406 117 ____ Total 690 ____ ____f. Jobs completed: 401, 402 , 403, and 405.
=+d. Depreciation of machinery and equipment, $1,870.
=+Job Materials Factory Labor No. 401 $ 9,200 $ 9,250 No. 402 11,000 13,400 No. 403 6,400 5,000 No. 404 18,200 17,400 No. 405 8,600 7,400 No. 406 8,500 8,900 For general factory use 4,100 9,600c. Factory overhead costs incurred on account, $2,750.
=+PR 19-5A Flow of costs and income statement obj. 2✔ 1. Income from operations,$3,300,000 Chapter 19 Job Order Costing 889 Grand Valley Apparel Co. uses a job order cost system. The following data summarize the operations related to production for May 2010, the first month of operations:a.
=+2. Determine the balances in the work in process and finished goods inventory for the Smashing Britney CD on December 31, 2010.
=+1. Prepare an annual income statement for the Smashing Britney CD, including supporting calculations, from the information above.
=+Number of customers (record stores) 42,500 Number of CDs sold 850,000 Wholesale price (to record store) per CD $16 Factory overhead cost is applied to jobs at the rate of $1,200 per copy machine hour.There were an additional 25,000 copied CDs, packages, and inserts waiting to be assembled on
=+The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine requires one hour per 2,400 CDs.After the CDs are copied, they are brought to an assembly area where an employee packs the CD
=+2. Determine the July 31 balances for each of the inventory accounts and factory overhead.Digital Tunes Inc. is in the business of developing, promoting, and selling musical talent on compact disc (CD). The company signed a new group, called Smashing Britney, on January 1, 2010. For the first
=+1. Determine the missing amounts associated with each letter. Provide supporting calculations by completing a table with the following headings:July 1 Cost of Job Work in Direct Direct Factory Total Unit Units Goods No. Quantity Process Materials Labor Overhead Cost Cost Sold Sold
=+d. Customer jobs completed and units sold in July were as follows:Completed Units Sold Job No. Style in July in July No. 21 X-10 X 160 No. 22 X-20 X 320 No. 23 X-50 0 No. 24 T-20 X 210 No. 25 X-40 X 150 No. 26 T-10 0 Instructions
=+c. The July 1 Work in Process balance consisted of two jobs, as follows:Work in Process, Job No. Style July 1 Job 21 X-10 $ 6,000 Job 22 X-20 16,000 _______ Total $22,000 _______ _______
=+b. Factory overhead is applied to each job at a rate of 160% of direct labor cost.
=+2. Assign number 10-206 to the job, record the costs incurred, and complete the job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that five meters of materials were spoiled, the factory overhead rate has been proved
=+H34 9 hours at $14.50 130.50 Instructions 1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.
=+PR 19-4A Analyzing manufacturing cost accounts obj. 2✔ G. $282,130 On May 16, the chair and couch were picked up from the residence of Queen Mercury, 10 Rhapsody Lane, Lake Forest, with a commitment to return it on June 12.The job was completed on June 8.The related materials requisitions and
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