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CHAPTER 5
DISCUSSION QUESTIONS
Q5-4.
Q5-5.
Q5-6.
Q5-7.
Q5-8.
5-1
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5-2
Chapter 5
EXERCISES
E5-1
E5-2
E5-3
(1)
Job 5575
Direct material...............................................................
Direct labor....................................................................
Applied overhead .........................................................
Total job cost .......................................................
$24,070
22,832
10,024
$56,926
Job 5576
Direct material...............................................................
Direct labor....................................................................
Applied overhead .........................................................
Cost to date..........................................................
$ 4,420
2,600
2,000
$ 9,020
$37,500
12,300
$25,200
E5-4
(1)
$ 8,000
88,500
$96,500
6,500
$90,000
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Chapter 5
5-3
E5-4 (Concluded)
(2)
(3)
(4)
(5)
$ 90,000
30,000
60,000
$180,000
14,400
$194,400
9,600
$184,800
5,000
3,000
6,000
14,000
$184,800
12,000
$196,800
14,000
$182,800
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5-4
Chapter 5
E5-5 Materials:
Beginning inventory ............................................
Purchases.............................................................
Materials available for use..................................
Less ending inventory ........................................
Materials used......................................................
Direct labor (($686 $326) 1.6) ................................
Factory overhead ($225 .6) .......................................
Total manufacturing cost.............................................
Add work in process, beginning inventory................
Less work in process, ending inventory ....................
Cost of goods manufactured ......................................
Add finished goods, beginning inventory..................
Cost of goods available for sale .................................
Less finished goods, ending inventory......................
Cost of goods sold.......................................................
E5-6
(1)
$ 75
336 (1)
$411
85
$326
225 (2)
135
$686
80
$766
30
$736 (3)
90
$826
110
$716 (4)
Materials ......................................................................
Direct labor ..................................................................
Factory overhead:
Molding (1,000 DLH $2.70)...............................
Decorating ($6,000 35%) ..................................
Estimated cost to produce ..........................................
$13,000
15,000
(2)
Materials ......................................................................
Direct labor....................................................................
Estimated prime cost ...................................................
$13,000
15,000
$28,000
(3)
Direct labor....................................................................
Factory overhead ($2,700 + $2,100) ............................
Estimated conversion cost ..........................................
$15,000
4,800
$19,800
(4)
$32,800
11,480
$44,280
2,700
2,100
$32,800
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Chapter 5
5-5
E5-7
(1)
Direct Materials
Date
Issued
Amount
9/14
$ 600
9/20
331
9/22
200
$1,131
(2)
Direct Labor
Date
(Week of)
9/20
9/26
Hours
90
70
Rate
$6.20
7.30
Cost
$ 558
511
$1,069
$800
E5-8
(1)
(2)
(3)
(4)
Credit
Debit
Work in Process (35,000 + 45,000 + 55,000) .............. 135,000
Materials ...............................................................
135,000
120,000
96,000
288,000
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5-6
E5-9
Chapter 5
(a)
(b)
(c)
(d)
(e)
(f)
(g)
35,000
10,000
9,400
9,400
1,200
1,220
4,500
1,250
5,400
5,400
4,500
E5-10
Materials
Inv.
10,000
WIP
Purch.
138,000
148,000
38,000
Inv.
WIP
Finished Goods
50,000
CGS
300,000
350,000
145,000
110,000
205,000
Work in Process
Inv.
30,000 FG
Materials 110,000
Factory
overhead 90,000
Labor
180,000
410,000
110,000
Cost of Goods Sold
FG
205,000
300,000
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Chapter 5
5-7
E5-11
(1)
(2)
11,250.00
3,945.00
5,917.50
21,112.50
21,112.50
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5-8
Chapter 5
PROBLEMS
P5-1
(1)
(2)
(3)
(4)
(5)
Conversion cost:
Labor: Grinding (8,000 hrs. $5.60) .................
Machining (4,600 hrs. $6) ...................
Factory overhead: Grinding (8,000 hrs. $6).....
Machining (4,600 hrs. $8) ..
$ 60,000
44,800
27,600
48,000
36,800
$217,200
$217,200
15,000
$232,200
17,600
$214,600
$214,600
22,000
$236,600
17,000
$219,600
$ 44,800
27,600
48,000
36,800
$157,200
$ 60,000
18,000
$ 78,000
19,000
$ 59,000
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Chapter 5
5-9
P5-2
(1)
Materials
4/1
2,700
Indirect
Purchases 11,550
Material
14,250
Direct
1,755
Material
* $9,705 =
2,790
9,705*
12,495
& 206:
Job 206
Total
+ $1,980 = $ 4,015
+ 1,000 = 3,500
+
800 = 2,800
+ $3,780 = $10,315
1,250
2,000
1,600
9,550
9,550
14,325
14,325
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5-10
Chapter 5
P5-2 (Concluded)
(3)
(4)
$9,365
$ 5,280
1,520
800
7,600
$1,765
*100 + 75 + 105 + 50
(5)
Jobs 201, 202, and 205 were sold. Their costs are $8,450
$6,280 = $24,280.
Sales ($24,280 1.5) ....................................................
Cost of goods sold.......................................................
Underapplied overhead................................................
Gross profit for April ....................................................
+ $9,550 +
$36,420
(24,280)
(1,765)
$10,375
P5-3
Bal.
(i)
Finished Goods
80,000
320,000
400,000
40,000
360,000
Bal.
(c)
(e)
Work in Process
20,000 (i)
150,000
80,000
100,000 *
350,000
30,000
320,000
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Chapter 5
5-11
P5-3 (Concluded)
Bal.
(b)
(d)
(f)
Bal.
(a)
Materials
15,000
(e)
100,000
115,000
23,000
360,000
Accounts Payable
102,000
Bal.
7,000
100,000
107,000
5,000
(j)
Accrued Payroll
172,000 Bal.
Accounts Receivable
45,000
(h)
480,000
500,000
545,000
65,000
11,000
175,000
186,000
14,000
Sales
(a)
500,000**
Materials purchased$100,000
Cost of goods sold$360,000
Finished goods ending inventory$40,000
Work in process ending inventory$30,000
Direct labor cost$100,000
Applied factory overhead$150,000
Over or underapplied factory overhead$3,000 overapplied
Closed out to the cost of goods sold account
CGA-Canada (adapted). Reprint with permission.
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5-12
Chapter 5
P5-4
(1)
COLUMBUS COMPANY
Cost of Goods Sold Statement
For Month Ended October 31
Materials:
Materials and supplies inventory, Oct. 1 .........
Purchases...........................................................
Materials and supplies available for use.........
Less: Factory supplies used ......... $ 3,950
Materials and supplies
inventory, Oct. 31 .................
31,750
Materials consumed ..........................................
Direct labor .....................................................................
Applied factory overhead ..............................................
Total manufacturing cost...............................................
Add work in process inventory, Oct. 1 .........................
$40,700
24,800
$65,500
35,700
$29,800
18,600
27,450
$75,850
4,070
$79,920
4,440
$75,480
9,800
$85,280
9,250
$76,030
2,800
(300)
2,500
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Chapter 5
5-13
P5-4 (Concluded)
(2)
COLUMBUS COMPANY
Income Statement
For Month Ended October 31
Sales ...................................................................
Less sales returns and allowances .................
Net sales ...........................................................
Less cost of goods sold ...................................
Gross profit ........................................................
Less commercial expenses:
Marketing expense ...................................
Depreciationbuilding.............................
Depreciationoffice equipment..............
Administrative expense ...........................
Depreciationbuilding.............................
Depreciationoffice equipment..............
Income before income tax ................................
(3)
$144,900
1,300
$143,600
76,030
$ 67,570
$25,050
30
16
$19,700
20
24
$25,096
19,744
$29,400
27,450
$ 1,950
44,840
$ 22,730
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5-14
Chapter 5
P5-5
(1)
$19,000
10,000
$4,000
1,000
2,000
7,000
500
$36,500
26,000
$62,500
Liabilities
Current liabilities ...............................................
$17,500
Stockholders Equity
Common stock ...................................................
Retained earnings..............................................
Total stockholders equity.................................
Total liabilities and stockholders equity.........
$30,000
15,000
45,000
$62,500
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Chapter 5
5-15
P5-5 (Concluded)
(2)
$60,000
$ 4,000
15,000
$19,000
2,000
$17,000
9,000
9,000
$35,000
2,000
$37,000
1,000
$36,000
6,000
$42,000
4,000
$38,000
2,000
40,000
$20,000
$ 6,000
9,000
15,000
$ 5,000
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5-16
Chapter 5
P5-6
(1) and (2)
JUAREZ INC.
Job Order Cost Sheets To Post Beginning Inventory Data
March 1, 20
Materials ..............
Labor ....................
Factory Overhead
Total .........
(b) M.........
(c) M .........
(f) L..........
(h) OH ......
Total .........
(j)
Job 621
$ 2,800
2,100
1,680
$ 6,580
5,300
6,420
5,136
$23,436
Job 622
$ 3,400
2,700
2,160
$ 8,260
7,400
(400)
8,160
6,528
$29,948
Completed and transferred to warehouse
(2)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Materials ...............................................................
Accounts Payable .......................................
Job 623
$ 1,800
1,350
1,080
$ 4,230
5,900
6,320
5,056
$21,506
Still in
process
Dr.
19,000.00
Cr.
19,000.00
Work in Process...................................................
Factory Overhead Control ..................................
Materials .....................................................
18,600.00
2,400.00
Materials ...............................................................
Work in Process ........................................
Factory Overhead Control ........................
600.00
800.00
Payroll ...................................................................
Accrued Payroll ..........................................
38,000.00
Work in Process...................................................
Factory Overhead Control ..................................
Marketing Expenses Control ..............................
Administrative Expenses Control ......................
Payroll .........................................................
20,900.00
7,600.00
5,700.00
3,800.00
9,404.50
21,000.00
400.00
200.00
800.00
38,000.00
38,000.00
7,154.50
2,000.00
250.00
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Chapter 5
5-17
P5-6 (Concluded)
(h)
(i)
(j)
(k)
Work in Process...................................................
Factory Overhead Control (or Applied
Factory Overhead) .................................
Dr.
16,720.00
Cr.
16,720.00
53,384.00
74,738.00*
Cash ......................................................................
Accounts Receivable .................................
69,450.00
53,384.00
74,738.00
53,384.00
53,384.00
69,450.00
21,000
800
21,800
3/1
(b)
(f)
(h)
Work in Process
Bal.
19,070 (c)
18,600 (i)
20,900
16,720
75,290
21,506
400
53,384
53,784
53,384
(3)
JUAREZ INC.
Schedule of Inventories, March 31
Materials ............................................................................................................
Work in Process (Job 623)...............................................................................
Finished Goods ................................................................................................
Total ...................................................................................................................
$14,800
21,506
15,000
$51,306
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5-18
Chapter 5
P5-7
(1) and (3)
(g)
Accounts Receivable
117,500.00
Materials
3/1 Bal. 66,300.00 (d)
(a)
41,000.00
(b)
5,800.00 *
113,100.00
59,370.00
Finished Goods
3/1 Bal.
78,830.00
(g)
94,501.65
(g)
94,501.65
173,331.65
78,830.00
3/1
(c)
(d)
(f)
(g)
(c)
(e)
Accounts Payable
(a)
(b)
Work in Process
Bal. 292,621.00
(g)
94,501.65
98,884.00
53,730.00
30,200.15
475,435.15
380,933.50
Cost of Goods Sold
94,501.65
Factory Overhead Control
12,480.00
(f)
30,200.15
28,461.87
(3)
10,741.72
40,941.87
40,941.87
Various Credits
(e)
28,461.87
Sales
(g)
Accrued Payroll
(c)
(c)
(f)
(3)
Payroll
111,364.00 (c)
53,730.00
41,000.00
5,800.00
48,100.00
111,364.00
111,364.00
Over- or Underapplied
Factory Overhead
10,741.72 3/1 Bal.
12,300.00
1,558.28
117,500.00
*$5,800 could also be posted directly to the work in process account, reducing entry
(d) to $47,930.
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Chapter 5
5-19
P5-7 (Concluded)
(2)
Job 204
Job 205
$15,230.00
9,480.00
$ 40,450
11,320
21,430.00
26,844.00
13,800.00
7,717.65*
$94,501.65
Job 206
Job 207
Total
$ 60,875.00
10,490.00
$16,640
5,800
$170,285.00
55,240
22,750
43,860.00
28,920.00
20,370
219,414.00
22,370
7,475
19,366.00
8,314.50
6,693
85,736.15
$159,605
$171,825.50
$49,503
$475,435.15
$380,933.50
(d)
(e)
(f)
Materials ...............................................................
Accounts Payable .......................................
Dr.
115,020
Cr.
115,020
Payroll ...................................................................
Accrued Payroll ..........................................
110,000
Work in Process...................................................
Factory Overhead Control ..................................
Marketing and Administrative Expenses ..........
Payroll ..........................................................
78,000
12,000
20,000
Work in Process...................................................
Factory Overhead Control ..................................
Materials .....................................................
108,175
7,520
Work in Process...................................................
Applied Factory Overhead ........................
42,750
190,350
255,000
110,000
110,000
115,695
42,750
190,350
255,000
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5-20
Chapter 5
P5-8 (Continued)
(g)
(h)
Cash ......................................................................
Sales Discounts...................................................
Accounts Receivable .................................
247,000
13,000
15,000
24,680
85,000
42,750
1,450
(i)
(j)
1/1 Bal.
(g)
37,680
2,000
85,000
42,750
1,450
GENERAL LEDGER
Cash
47,000
(h)
247,000
(i)
294,000
37,680
85,000
1/1 Bal.
(a)
122,680
Accounts Receivable
50,000
(g)
260,000
255,000
Materials
21,500 (d)
115,020
115,695
136,520
20,825
171,320
1/1 Bal.
(f)
260,000
1/1 Bal.
Machinery
45,300
305,000
45,000
Accumulated Depreciation
Machinery
1/1 Bal.
10,000
(h)
2,000
Finished Goods
32,500
1 /1 Bal.
12,000
1/1 Bal.
(c)
(d)
(e)
Work in Process
7,500
(f)
78,000
108,175
42,750
236,425
46,075
190,350
(i)
Accounts Payable
85,000 1/1 Bal.
(a)
58,875
115,020
173,895
88,895
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Chapter 5
5-21
P5-8 (Continued)
Accrued Payroll
(b)
(b)
Payroll
110,000
(c)
Sales
(f)
110,000
110,000
(c)
(d)
(h)
255,000
42,750
1,450
44,200
44,200
Retained Earnings
1/1 Bal.
(g)
Sales Discounts
13,000
(f)
(i)
34,925
(j)
191,800
35,000
Common Stock
1/1 Bal.
100,000
2,500
2,000
1,000
20,000
51,600
11,250
(f)
Job 103
88,350
46,075
88,350
Job 102
1/1 Bal.-Mat
1/1 Bal.-Lab
1/1 Bal.-OH
(c) Labor
(d) Materials
(e) Overhead
600
1,000
400
40,000
42,000
18,000
102,000
(c) Labor
18,000
(d) Materials 14,575
(e) Overhead 13,500
(f)
102,000
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5-22
Chapter 5
P5-8 (Concluded)
(4)
JACKSON COMPANY
Trial Balance
January 31
Cash ...........................................................................................
Accounts Receivable ................................................................
Finished Goods .........................................................................
Work in Process ........................................................................
Materials.....................................................................................
Machinery ..................................................................................
Accumulated DepreciationMachinery .................................
Accounts Payable......................................................................
Accrued Payroll .........................................................................
Common Stock..........................................................................
Retained Earnings.....................................................................
Marketing and Administrative Expenses................................
Sales ...........................................................................................
Sales Discounts ........................................................................
Cost of Goods Sold ..................................................................
(5)
171,320
45,000
32,500
46,075
20,825
45,300
12,000
88,895
110,000
100,000
34,925
35,000
255,000
13,000
191,800
600,820
600,820
JACKSON COMPANY
Cost of Goods Sold Statement
For Month Ended January 31
$108,175
78,000
42,750
$228,925
7,500
$236,425
46,075
$190,350
1,450
$191,800