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SOLUTIONS TO EXERCISESSET B
EXERCISE 1-1B
(a) Factory utilities.....................................................................................
Depreciation on factory equipment...............................................
Indirect factory labor ..........................................................................
Indirect materials.................................................................................
Factory managers salary .................................................................
Property taxes on factory building ................................................
Factory repairs .....................................................................................
Manufacturing overhead ...................................................................
$ 15,600
12,650
48,900
80,800
13,000
2,500
2,000
$175,450
$137,600
89,100
175,450
$402,150
8,800
46,400
2,300
18,000
5,640
$ 81,140
EXERCISE 1-2B
(a)
$ 8,400
11,200
7,000
2,200
15,000
300
$44,100
1-1
Period costs:
Property taxes on office building..........................................
CEOs salary ................................................................................
Advertising ...................................................................................
Office supplies ............................................................................
Office utilities...............................................................................
Repairs on office equipment ..................................................
Total......................................................................................
$ 2,870
22,000
1,600
650
990
680
$28,790
EXERCISE 1-3B
(a) Work-in-process, 1/1.....................................
Direct materials used....................................
Direct labor.......................................................
Manufacturing overhead
Depreciation on plant ...........................
Factory supplies used..........................
Property taxes on plant .......................
Total manufacturing overhead ..................
Total manufacturing costs..........................
Total cost of work-in-process....................
Less: Ending work-in-process...................
Cost of goods manufactured .....................
$ 10,000
$120,000
110,000
$60,000
25,000
19,000
104,000
334,000
344,000
14,000
$330,000
$ 60,500
330,000
390,500
50,600
$339,900
EXERCISE 1-4B
Total raw materials available for use:
Direct materials used..................................................................
Add: Raw materials inventory (12/31) ...................................
Total raw materials available for use.....................................
$190,000
17,500
$207,500
$190,000
17,500
165,000
$ 42,500
1-2
$550,000
80,000
$630,000
$630,000
210,000
$420,000
Direct labor:
Total manufacturing costs.............................................................
Less: Total overhead......................................................................
Direct materials used .........................................................
Direct labor .........................................................................................
$420,000
119,000
190,000
$111,000
EXERCISE 1-5B
A + $57,400 + $46,500 = $175,650
A = $71,750
$252,100 $11,000 = F
F = $241,100
$175,650 + B = $221,500
B = $45,850
$221,500 C = $180,725
C = $40,775
$273,700 + H = $335,000
H = $61,300
$335,000 $90,000 = I
I = $245,000
$236,500 + $15,600 = E
E = $252,100
1-3
$175,650
(46,500)
(57,400)
$ 71,750
$221,500
175,650
$ 45,850
$221,500
180,725
$ 40,775
Case B
(d) Direct materials used.......................................................................
Direct labor..........................................................................................
Manufacturing overhead.................................................................
Total manufacturing costs .............................................................
$ 68,400
86,500
81,600
$236,500
$236,500
15,600
$252,100
(f)
$252,100
11,000
$241,100
Case C
(g) Total manufacturing costs .............................................................
Less: Manufacturing overhead....................................................
Direct materials used..........................................................
Direct labor..........................................................................................
1-4
$273,700
(102,000)
(130,600)
$ 41,100
$335,000
273,700
$ 61,300
(i)
$335,000
90,000
$245,000
EXERCISE 1-6B
(a) (a) $127,000 + $140,000 + $89,000 = $356,000
(b) $356,000 + $33,000 $360,000 = $29,000
(c) $430,000 ($200,000 + $123,000) = $107,000
(d) $40,000 + $470,000 $430,000 = $80,000
(e) $257,000 ($80,000 + $100,000) = $77,000
(f)
HEINTZ COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended December 31, 2011
Work in process, January 1......................................
Direct materials ............................................................
Direct labor ....................................................................
Manufacturing overhead ...........................................
Total manufacturing costs...............................
Total cost of work in process ..................................
Less: Work in process inventory,
December 31 ....................................................
Cost of goods manufactured ...................................
$ 33,000
$127,000
140,000
89,000
356,000
389,000
29,000
$360,000
1-5
EXERCISE 1-7B
(a)
TART CORPORATION
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2011
Work in process, June 1 ..................................
Direct materials used........................................
Direct labor...........................................................
Manufacturing overhead
Indirect labor...............................................
Factory managers salary.......................
Indirect materials.......................................
Maintenance, factory equipment..........
Depreciation, factory equipment..........
Factory utilities ..........................................
Total manufacturing overhead.......
Total manufacturing costs ..............................
Total cost of work in process.........................
Less: Work in process, June 30...................
Cost of goods manufactured .........................
(b)
$ 3,000
$25,000
30,000
$4,500
5,000
2,200
1,800
1,400
400
70,300
73,300
2,800
$70,500
TART CORPORATION
Income Statement (Partial)
For the Month Ended June 30, 2011
Net sales............................................................................
Cost of goods sold
Finished goods inventory, June 1 ...................
Cost of goods manufactured [from (a)]............
Cost of goods available for sale.......................
Finished goods inventory, June 30.................
Cost of goods sold ......................................
Gross profit ......................................................................
1-6
15,300
$85,100
$ 5,000
70,500
75,500
9,500
66,000
$19,100
EXERCISE 1-8B
(a)
PARE, ASH, AND TOCY
Schedule of Cost of Contract Services Provided
For the Month Ended August 31, 2011
Supplies used (direct materials) ..........................................
$ 2,500
Salaries of professionals (direct labor) .............................
15,600
Service overhead:
Utilities for contract operations ..................................... $1,900
Contract equipment depreciation..................................
900
Insurance on contract operations .................................
800
Janitorial services for professional offices................
300
Total overhead ..............................................................
3,900
Cost of contract services provided...............................
$22,000
(b) The costs not included in the cost of contract services provided would
all be classified as period costs. As such, they would be reported on
the income statement under administrative expenses.
EXERCISE 1-9B
(a) Work-in-process, 1/1....................................
Direct materials
Materials inventory, 1/1 ...................... $ 22,000
Materials purchased ............................ 170,000
Materials available for use ................ 192,000
Less: Materials inventory, 12/31.....
30,000
Direct materials used ..................................
Direct labor .....................................................
Manufacturing overhead ............................
Total manufacturing costs ........................
Total cost of work-in-process...................
Less: Work-in-process, 12/31..................
Cost of goods manufactured....................
(b) Sales .................................................................
Cost of goods sold
Finished goods, 1/1 .............................
Cost of goods manufactured ..........
Cost of goods available for sale .....
Finished goods, 12/31 ........................
Cost of goods sold .......................
Gross profit.....................................................
Copyright 2010 John Wiley & Sons, Inc.
$ 18,500
$162,000
200,000
183,000
545,000
563,500
17,200
$546,300
$920,000
$ 27,000
546,300
573,300
31,000
542,300
$377,700
(For Instructor Use Only)
1-7
$31,000
17,200
30,000
$78,200
EXERCISE 1-10B
(a)
KURT MANUFACTURING
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2011
Work in process inventory, June 1 .................
Direct materials
Raw materials inventory, June 1.............
Raw materials purchases ..........................
Total raw materials available for use ........
Less: Raw materials inventory, June 30 .....
Direct materials used ..................................
Direct labor..............................................................
Manufacturing overhead
Indirect labor.................................................. $7,500
Factory insurance ........................................ 4,000
Machinery depreciation.............................. 5,000
Factory utilities ............................................. 3,100
Machinery repairs ........................................ 1,800
Miscellaneous factory costs..................... 1,500
Total manufacturing overhead...........
Total manufacturing costs .................................
Total cost of work in process............................
Less: Work in process inventory, June 30 .......
Cost of goods manufactured ............................
1-8
5,000
$10,000
64,000
74,000
13,100
60,900
57,000
22,900
140,800
145,800
13,000
$132,800
KURT MANUFACTURING
(Partial) Balance Sheet
June 30, 2011
Current assets
Inventories
Finished goods..................................................
Work in process ................................................
Raw materials.....................................................
$ 6,000
13,000
13,100
$32,100
EXERCISE 1-11B
(a) Raw Materials account:
(5,000 4,650) X $8 = $2,800
Work in Process account:
(4,600 X 10%) X $8 = $3,680
Finished Goods account:
(4,600 X 90% X 25%) X $8 = $8,280
Cost of Goods Sold account: (4,600 X 90% X 75%) X $8 = $24,840
Selling Expenses account:
50 X $8 = $400
Proof of cost of head lamps allocated (5,000 X $8 = $40,000)
Raw materials
Work in process
Finished goods
Cost of goods sold
Selling expenses
Total
(b) To:
$ 2,800
3,680
8,280
24,840
400
$40,000
Chief Accountant
From:
Student
Subject:
Two accounts will appear in the income statement. Cost of Goods Sold
will be deducted from net sales in determining gross profit. Selling expenses will be shown under operating expenses and will be deducted
from gross profit in determining net income. Sometimes, the calculation
for Cost of Good Sold is shown on the income statement. In these cases,
the balance in Finished Goods inventory would also be shown on the
income statement.
The other accounts associated with the head lamps are inventory accounts which contain end-of-period balances. Thus, they will be reported
under inventories in the current assets section of the balance sheet in
the following order: finished goods, work in process, and raw materials.
Copyright 2010 John Wiley & Sons, Inc.
1-9
1-10
10,000
5,000
10,000
64,000
57,000
7,500
4,000
5,000
1,800
3,100
1,500
Adjusted
Trial Balance
Dr.
Cr.
5,000
13,000
10,000
13,100
64,000
57,000
7,500
4,000
5,000
1,800
3,100
1,500 000,000
158,900
26,100
000,000 132,800
158,900 158,900
Cost of Goods
Manufactured
Dr.
Cr.
10,000
6,000
Income
Statement
Dr.
Cr.
132,800
KURT MANUFACTURING
Worksheet (Partial)
For the Month Ended June 30, 2011
6,000
13,000
13,100
Balance
Sheet
Dr.
Cr.
*EXERCISE 1-12B
Cost Item
$20,000
55,000
17,800
$92,800
000,000
$20,000
$20,000
Direct
Materials
000,000
$55,000
$55,000
2,000
$17,800
800
700
6,000
3,000
$ 1,300
4,000
Product Costs
Direct
Manufacturing
Labor
Overhead
(a)
500
000,000
$13,700
200
8,000
5,000
Period
Costs
SOLUTIONS TO PROBLEMSSET C
PROBLEM 1-1C
1-11
1-12
Cost Item
$ 60,000
65,000
15,300
$140,300
000,000
$60,000
$60,000
Direct
Materials
000,000
$65,000
$65,000
800
600
$15,300
$ 1,500
7,500
3,500
1,400
Product Costs
Direct
Manufacturing
Labor
Overhead
(1)
(2)
(3)
(4)
(5)
(a)
00,000
$6,000
$6,000
Period
Costs
PROBLEM 1-2C
PROBLEM 1-3C
(a) Case A
A = $6,300 + $3,000 + $6,000 = $15,300
$15,300 + $1,000 B = $14,600
B = $15,300 + $1,000 $14,600 = $1,700
$14,600 + C = $18,300
C = $18,300 $14,600 = $3,700
D = $18,300 $1,500 = $16,800
E = ($22,500 $1,500) $16,800 = $4,200
F = $4,200 $2,700 = $1,500
Case B
G + $4,000 + $5,000 = $16,000
G = $16,000 $4,000 $5,000 = $7,000
$16,000 + H $2,000 = $20,000
H = $20,000 + $2,000 $16,000 = $6,000
(I $1,200) K = $6,000
(I $1,200) $21,500 = $6,000
I = $1,200 + $21,500 + $6,000 = $28,700
(Note: Item I can only be solved after item K is solved.)
J = $20,000 + $4,000 = $24,000
K = $24,000 $2,500 = $21,500
$6,000 L = $2,200
L = $3,800
1-13
CASE A
Cost of Goods Manufactured Schedule
Work in process, beginning.......................................
Direct materials..............................................................
Direct labor......................................................................
Manufacturing overhead.............................................
Total manufacturing costs ................................
Total cost of work in process....................................
Less: Work in process, ending................................
Cost of goods manufactured ....................................
(c)
$ 1,000
$6,300
3,000
6,000
15,300
16,300
1,700
$14,600
CASE A
Income Statement
Sales ..................................................................................
Less: Sales discounts ................................................
Net sales...........................................................................
Cost of goods sold
Finished goods inventory, beginning ...........
Cost of goods manufactured............................
Cost of goods available for sale......................
Finished goods inventory, ending..................
Cost of goods sold .....................................
Gross profit .....................................................................
Operating expenses .....................................................
Net income.......................................................................
$22,500
1,500
$21,000
$ 3,700
14,600
18,300
1,500
16,800
4,200
2,700
$ 1,500
CASE A
(Partial) Balance Sheet
Current assets
Cash..........................................................................
Receivables (net)..................................................
Inventories
Finished goods ............................................
Work in process...........................................
Raw materials ...............................................
Prepaid expenses.................................................
Total current assets....................................
1-14
$ 3,000
10,000
$1,500
1,700
700
3,900
200
$17,100
PROBLEM 1-4C
(a)
9,500
$ 47,000
62,500
109,500
44,800
$ 64,700
145,100
40,000
18,100
12,900
7,700
7,400
6,900
800
93,800
303,600
313,100
7,500
$305,600
1-15
(c)
$465,000
2,500
$462,500
85,000
305,600
390,600
77,800
312,800
$149,700
1-16
$ 28,000
27,000
$77,800
7,500
44,800
130,100
$185,100
PROBLEM 1-5C
(a)
MAYO COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended August 31, 2011
Work in process, August 1 .....................
Direct materials
Raw materials inventory,
August 1 ..........................................
Raw materials purchases...............
Total raw materials
available for use ...........................
Less: Raw materials inventory,
August 31................................
Direct materials used.......................
Direct labor ..................................................
Manufacturing overhead
Factory facility rent ..........................
Depreciation on factory
equipment .......................................
Indirect labor ......................................
Factory utilities* ................................
Factory insurance**..........................
Total manufacturing
overhead.................................
Total manufacturing costs......................
Total cost of work in process ................
Less: Work in process,
August 31 ........................................
Cost of goods manufactured .................
$ 20,000
$ 19,500
210,000
229,500
30,000
$199,500
160,000
$ 60,000
35,000
15,000
5,000
3,500
118,500
478,000
498,000
21,000
$477,000
*$10,000 X 50%
**$5,000 X 70%
1-17
MAYO COMPANY
Income Statement
For the Month Ended August 31, 2011
Sales (net)......................................................................
Cost of goods sold
Finished goods inventory, August 1 ...........
Cost of goods manufactured..........................
Cost of goods available for sale....................
Less: Finished goods inventory,
August 31.................................................
Cost of goods sold ...................................
Gross profit ...................................................................
Operating expenses
Advertising expense .........................................
Selling and administrative salaries ..............
Depreciation expensesales
equipment ........................................................
Utilities expense*................................................
Insurance expense** .........................................
Total operating expenses .......................
Net loss...........................................................................
$675,000
$ 40,000
477,000
517,000
49,000
468,000
207,000
75,000
70,000
50,000
5,000
1,500
201,500
$ 5,500
*$10,000 X 50%
**$5,000 X 30%
1-18