CHAPTER1: Cost Accounting and Cost Concepts

1 D
2 C
3 D
4 D
5 D
6 A
7 B
8 B
9 C
10 A
11 A
12 C
13 D
14 C
15 D
16 A
17 D
18 B
19 C
20 B
21 C
22 B
23 C
24 A
25 B
26 D
27 A
28 C
29 A
Solution: Direct material consumed 45000
Direct labor 30000
Direct expenses 10000
Prime Cost 85000

30 B
Solution: Sales 500000
Cost of Goods Sold (350000)
Gross Margin 150000
Operating Expenses (30000)
Operating Income 120000

31 B
Solution: Total cost 30000 Cost per unit produced
 Units produced 24000 Units sold
Cost per unit produced 1 Cost of Goods Sold

32 B
Solution: Direct Materials 100000
Direct Labor 90000
Traceable cost 190000

33 C
Solution: Salaries 300000
Rent 180000
Total fixed cost 480000

34 C
Solution: Formula y=a+bx Y = 15000 + (3 x 12000)
Fixed cost (Y-intercept) 15000 Y = 15000 + 36000
Y= 51000
Variable cost (slope) 3

35 D
Solution: Direct materials and direct labor 700000
Other variable manufacturing costs 100000
Depreciation of factory building
and manufacturing equipment 80000
Other fixed manufacturing overhead 18000
Product Cost 898000

36 B
Solution: Raw material purchases 110000
Increase in raw materials inventory (15000)
Direct labor 80000
Factory overhead 120000
Manufacturing cost 295000
Decrease in work in process 19000
Cost of goods manufactured 314000
Increase in finished goods inventory (26000)
Cost of goods sold 288000

37 A
Solution: Raw material purchases 90000 Direct Labor
Decrease in raw materials inventory 4000 Factory overhead
Direct Materials 94000 Conversion costs
Direct Labor 50000
Factory Overhead (squeeze) 75000
 Total manufacturing costs 219000

38 A
Solution: Total manufacturing costs 219000 Cost of goods sold
Decrease in work in process 21000 Cost ratio
Cost of goods manufactured 240000 Sales
Increase in finished goods inventory (45000) Gross Margin (%)
Cost of goods sold 195000 Gross Margin

39 C
Solution: Total operating costs and expenses 560000
Selling and administrative expenses (140000)
Total manufacturing overhead 420000

40 C
Solution: Raw material, beginning 58600
Raw material purchases (squeeze) 72000
Raw material, ending (60200)
Raw materials used 70400
Direct labor 40000
Factory overhead 64000
Manufacturing cost 174400
Work in process, beginning 46000
Work in process, ending (62000)
Cost of goods manufactured 158400
Finished goods inventory, beginning 87300
Finished goods inventory, ending (90700)
Cost of goods sold 155000
unit produced 1.25
 22000
Goods Sold 27500

15000 + (3 x 12000)
15000 + 36000

50000
75000
125000
oods sold 195000
60%
325000
40%
130000
CHAPTER5: Accounting for Manufacturing Overhead

1B
2B
3C
4A
5A
Solution: Overhead Account
Actual Overhead Applied Overhead
340600 310000
30600 underapplied

(Entry) Cost of goods sold

Work in process inventory
Finished goods inventory
Manufacturing overhead

6A
Solution: Estimated Variable = (4320-3120)
(1800-1200)
Estimated Variable = 2

7A
Solution: Variable cost per unit = (21600-20000)
(18000-10000)
Estimated Variable = 0.2

8D
Solution: Formula y=a+bx
Variable cost (slope) 0.2

Solve for a:
21600 = a + (.2 x 18000)
21600 = a + 3600
a= 18000

9A
Solution: Formula y=a+bx
x (units) 14000

Solve for Y:
Y = 18000 + (.2 x 14000)
Y = 18000 + 2800
Y= 20800
10 A
Solution: Formula y=a+bx
Regression equation Y = 2500 + 5.0x

11 B Correlation coefficient = -0.93 (close to -1.00)

12 B
13 B
Amount to be
Solution: allocated Mixing
Direct labor 180000
Maintenance cost:
Fixed 96000 57600
Variable 290000 174000
Total 411600

14 C
Amount to be
Solution: allocated Mixing
Direct labor 180000
Maintenance cost:
Fixed 96000 57600
Variable 290000 174000
Total 411600

15 A
Solution: Step Method Service Department
Maintenance Personnel
Direct cost 120000 60000
Maintenance 120000 (120000) 20000
Personnel 60000 80000
(80000)

16 B
Solution: Direct Method Service Department
Maintenance Personnel
Direct cost 120000 60000
Maintenance 120000 (120000)
Personnel 60000 (60000)

17 A
Solution: Step Method Service Department
Maintenance Personnel
Direct cost 120000 60000
 Maintenance 120000 (120000) 20000
Personnel 60000 80000
(80000)

18 A
Solution: Actual Manufacturing Overhead 500000
Applied Manufacturing Overhead 600000
Overapplied 100000

19 C
Solution: Direct labor hours 150000
Predetermined overhead rate per direct labor hour 6
Total Applied Overhead 900000

20 A
Solution: Given:
Direct labor X
Applied overhead rate .6X

Formula: 882000 = 122000 + .6X + X

882000 = 122000 + 1.6X
1.6 X = 882000 - 122000
1.6 X = 760000
1.6 1.6
X= 475000

Applied Overhead 285000

21 A
Solution: Job #108 Job #109
Direct Labor 20000 25000
Applied FOH 16000 20000

22 B
Solution: Job #108 Job #109
Direct Labor 20000 25000
Applied FOH 16000 20000

P5-4
Solution: a. Direct distribution method Support Department
Maintenance Technology
Costs incurred 83200 50000
Maintenance 83200 (83200)
Technology 50000 (50000)

b. Step-down method Support Department

Maintenance Technology
Costs incurred 83200 50000
Maintenance 83200 (83200) 16640
Technology 50000 66640
(66640)

c. Reciprocal method Support Department

Maintenance Technology
Costs incurred 83200 50000
Maintenance 90000 (90000) 18000
Technology 68000 6800 (68000)
0 0

Formula: M = 83200 + .1 T
T = 50000 + .2 M

Solve for M: M = 83200 + .1 (50000 + .2M)

M = 88200 + .02M
M - .02M = 88200
.98M = 88200
0.98 0.98
M= 90000

Solve for T: T = 50000 + .2 M

T = 50000 + .2 (90000)
T = 50000 + 18000
T= 68000
 Ending Ratio
Cost of goods sold 217000 0.7 21420
Work in process inventory 62000 0.2 6120
Finished goods inventory 31000 0.1 3060
Total 310000 30600

21420
6120
3060
30600
se to -1.00)

Finishing
120000

38400
116000
274400

Finishing
120000

38400
116000
274400

Production Department Basis:

Cutting Molding Square footage
140000 150000 Number of Employees
52500 47500
32000 48000
224500 245500

Production Department Basis:

Cutting Molding Square footage
140000 150000 Number of Employees
63000 57000
24000 36000
227000 243000

Production Department Basis:

Cutting Molding Square footage
140000 150000 Number of Employees
 52500 47500
32000 48000
224500 245500

Raw materials used 122000

Direct labor 475000
Factory overhead 285000
Manufacturing cost 882000

Total Formula:
100000 Applied FOH per job = ( Direct labor cost per job / total direct labor ) * Total
80000

Total Formula:
100000 Applied FOH per job = ( Direct labor cost per job / total direct labor ) * Total
80000

Production Department Basis: Maintenance

Mixing Finishing Maintenance
 Technology 0.2
31200 52000 Mixing 0.3
11111.1111 38888.88889 Finishing 0.5
42311.1111 90888.88889 1

Production Department Basis: Maintenance

Mixing Finishing Maintenance
Technology 0.2
24960 41600 Mixing 0.3
14808.8889 51831.11111 Finishing 0.5
39768.8889 93431.11111 1

Production Department Basis: Maintenance

Mixing Finishing Maintenance
Technology 0.2
27000 45000 Mixing 0.3
13600 47600 Finishing 0.5
40600 92600 1

Legend:
M = Maintenance
T = Technology
Maintenance Personnel Cutting Molding Total
900 800 2100 1900 5700
6 12 20 30 68

Maintenance Personnel Cutting Molding Total

900 800 2100 1900 5700
6 12 20 30 68

Maintenance Personnel Cutting Molding Total

900 800 2100 1900 5700
6 12 20 30 68
otal direct labor ) * Total Applied FOH

otal direct labor ) * Total Applied FOH

Technology
0.1
 0.2
0.7
1

Technology
0.1

0.2
0.7
1

Technology
0.1

0.2
0.7
1