Chapter 2 - Job Order Costing ( Solution Manual) PDF

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Job Order Costing Questions & Solutions Accounting Principles (9th edition)

Jerry J. Weygandt Paul D. Kimmel Donald E. Kieso

Do It! Review 16. Tina Birk believes that the cost of goods manufactured s i 17. J m

911

dicate the balance in the manufacturing overhead account overhead is If not, indi-

B BE20 tome flow trans

t of a job ng system, ctions.

BE20 follo whic utilit cost.

accumulating s.

BE20 1 $90 to re

e assignment sts.

BE20 ticke $1,40 used

e assignment ts.

BE20 BE20 for M

eets.

BE20 $800, hour activ

mined

BE20 Janu assig

ing ction.

BE20 11 $3 for th

completion ted jobs.

BE20 $1,50 Dece

entries for plied

DO IT! REVIEW DO IT!

20-1

During the current month, Barnum Company incurs the following manufacturing

costs: a. Purchased raw materials of $13,000 on account. b. Incurred factory labor of $40,000. Of that amount, $31,000 relates to wages payable and $9,000 relates to payroll taxes payable.

Prepare journal entries for manufacturing costs. (SO 2)

912

Chapter 20 Job Order Costing Factory utilities of $3,100 are payable, prepaid factory property taxes of $2,400 have expired, ecord

Assign costs

wing:

(SO 3, 4)

m the Prepare entri and sale of jo

312. nalize

(SO 5) Apply manu and determin overapplicati (SO 6)

direct which . e the

EXER Prepare entri labor. (SO 2, 3)

Prepare jour manufacturin (SO 3, 4, 5)

onth . The umuirect

, the : Job veals

Milner Manufacturing applies manufacturing overhead to jobs at an overhead rate of 80% of direct labor cost. Job No. 429 is completed during the month. Instructions (a) Prepare summary journal entries on May 31 to record: (i) the requisition slips, (ii) the time tickets, (iii) the assignment of manufacturing overhead to jobs, and (iv) the completion of Job No. 429. (b) Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets of the unfinished jobs.

Exercises

913

sheet and manufactur-

E20-

Instr (a) ( ( (b) P J anufacturmissing

E20prese

Instr Indic appli E20hours used. Overhead costs are expected to total $305,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Instructions (a) Compute the manufacturing overhead rate for the year. (b) What is the amount of under- or overapplied overhead at December 31? (c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of goods sold.

facturing overhead rate and under- or overapplied overhead. (SO 4, 6)

914

Chapter 20 Job Order Costing

Analyze job prepare entry job. (SO 2, 3, 4,

uring

Prepare entri manufacturin (SO 2, 3, 4, 5

reqwages

e the

Prepare entri manufacturin (SO 2, 3, 4, 5

2. Materials requisitioned and factory labor used by job: Job Number

Materials

Factory Labor

A20 A21 A22 A23 General factory use

$ 35,240 42,920 36,100 39,270 4,470

$18,000 22,000 15,000 25,000 7,300

$158,000

$87,300

Exercises 3. 4. 5. 6.

915

Manufacturing overhead costs incurred on account $39,500. D M Jo

Instr Prep divid E201. M $8 2. M 3. D m 4. Sa

oods dule and tements.

Instr (a) P (b) P (c) I E20show

process and m job cost

Job 1 June. Instr (a) W (b) W (c) W E20Mort

Cost 1. 2. 3. 4. 5. 6.

Purchased supplies on account $1,500. Issued supplies $1,200 (60% direct and 40% indirect). Time cards for the month indicated labor costs of $50,000 (80% direct and 20% indirect). Operating overhead costs incurred for cash totaled $40,000. Operating overhead is applied at a rate of 90% of direct attorney cost. Work completed totaled $70,000.

Instructions (a) Journalize the transactions for March. Omit explanations. (b) Determine the balance of the Work in Process account. Use a T account.

costs of

916

Chapter 20 Job Order Costing

Determine co ending balan process and o

e the isted

(SO 3, 4, 6)

overnd of

Determine p head rate, ap determine wh under- or ov

deced to rrent

(SO 4, 6)

n dt

ww w .

EXER

le y wi

PROB Prepare entri system and jo (SO 2, 3, 4, 5

oducocess. direct comlance d 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $90,000 on account. 2. Incurred factory labor costs of $65,000. Of this amount $16,000 related to employer payroll taxes. 3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $15,000; depreciation expense $19,000, and various other manufacturing overhead costs on account $20,000.

Problems: Set A

917

4. Assigned direct materials and direct labor to jobs as follows.

Instr (a) C m d (b) O s (c) P c (d) P m t (e) T tr (f) P (g) W d (h) W

0 00

P20taine

a job cost income

Jo Num 764 764 764 Othe 1. R te 2. Fi 3. Jo 4. Jo 5. M 6. O an Instr (a) P is f r (b) Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold. (c) Determine the gross profit to be reported for 2010. P20-3A Enos Inc. is a construction company specializing in custom patios.The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2010, the general ledger for Enos Inc. contains the following data. Raw Materials Inventory Work in Process Inventory

$4,200 $5,540

Manufacturing Overhead Applied Manufacturing Overhead Incurred

$32,640 $31,650

7642:

(b) Amount ⴝ $4,800 (c) $156,600 Prepare entries in a job cost system and cost of goods manufactured schedule. (SO 2, 3, 4, 5)

918

Chapter 20 Job Order Costing Subsidiary data for Work in Process Inventory on June 1 are as follows.

paid. costs .

. The total

costs abor,

(d) Cost of g tured $14 Compute pre head rates, ap calculate und overhead.

manlabor nt K. were

(SO 4, 6)

During January, the job cost sheets showed the following costs and production data. Department Direct materials used Direct labor costs Manufacturing overhead incurred Direct labor hours Machine hours

D

E

K

$140,000 $120,000 $ 89,000 8,000 34,000

$126,000 $110,000 $124,000 11,000 45,000

$78,000 $37,500 $74,000 3,500 10,400

Problems: Set B Instr (a) C (b) C (c) C

0 8,000

P20found

uring mine

919

0), $1,200

Dec Dec Dec

Dec Dec Dec Dec Dec

Othe 1. O bi at 2. D un uf 3. O O $4 4. M Instr List t

P P20-1B Weinrich Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor hours. On January 1, 2010, Job No. 25 was the only job in process.The costs incurred prior to January 1 on this job were as follows: direct materials $10,000; direct labor $6,000; and manufacturing overhead $9,000. Job No. 23 had been completed at a cost of $42,000 and was part of finished goods inventory. There was a $5,000 balance in the Raw Materials Inventory account. During the month of January, the company began production on Jobs 26 and 27, and completed Jobs 25 and 26. Jobs 23 and 25 were sold on account during the month for $63,000 and $74,000, respectively. The following additional events occurred during the month.

Prepare entries in a job cost system and job cost sheets. (SO 2, 3, 4, 5, 6)

920

Chapter 20 Job Order Costing Purchased additional raw materials of $40,000 on account. taxes. labor ts on

hours . uring , and cost ts in, and s, use (e) Job 25, $ Job 26, $

al en. What

Prepare entri system and p statement. (SO 2, 3, 4, 5

con-

otal osts 3,000 3,000 8,000 0,000 8,000

w ma2,000. 4. Job Nos. 7648, 7649, and 7650 were sold on account for $490,000. 5. Manufacturing overhead incurred on account totaled $135,000. 6. Other manufacturing overhead consisted of indirect materials $12,000, indirect labor $18,000 and depreciation on factory machinery $19,500.

(a) (1) $111,000 (4) $180,000 Unfinished job 7652, $198,000

Instructions (a) Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. (Hint: Use a single T account for Work in Process Inventory.) Calculate each of the following, then post each to the T account: (1) beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed jobs.

Problems: Set B

921

(b) Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated e (c) D

500

P20ledge

a job cost goods man-

The Subs

$4,00 follow

T jacuz Instr (a) P la te (b) P (c) R (d) P

manufac-

P20depa Depa In establishing the predetermined overhead rates for 2010 the following estimates were made for the year. Department Manufacturing overhead Direct labor cost Direct labor hours Machine hours

A

B

C

$780,000 $600,000 50,000 100,000

$640,000 $100,000 40,000 120,000

$750,000 $600,000 40,000 150,000

mined oververhead, and overapplied overhead. (SO 4, 6)

922

Chapter 20 Job Order Costing During January, the job cost sheets showed the following costs and production data.

(a) 130%, $1 (b) $202,400 $177,400 (c) $3,600 $4 Analyze man accounts and missing amo

in its

(SO 2, 3, 4, 5

a)

f)

j)

m)

000

0 and 9 was unfinished. This job had charges for direct materials $2,000 and direct labor $1,500, plus manufacturing overhead. Manufacturing overhead was applied at the rate of 120% of direct labor cost. 3. On July 1, Job No. 4084, costing $145,000, was in the finished goods warehouse. On July 31, Job No. 4088, costing $138,000, was in finished goods. 4. Overhead was $3,000 underapplied in July. (d) $ 95,000 (f) $310,900 (l) $111,000

Instructions List the letters (a) through (n) and indicate the amount pertaining to each letter. Show computations.

Copyright © 2009 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 9/e, Solutions Manual

Factory Labor (2) Factory labor (5) Factory labor incurred used

Work in Process Inventory (4) Direct (7) Cost of commaterials used pleted jobs (5) Direct labor used (6) Overhead applied

Finished Goods Inventory (7) Cost of com(8) Cost of goods pleted jobs sold

Cost of Goods Sold (8) Cost of goods sold

Key to Entries: Accumulation 1. Purchase raw materials 2. Incur factory labor 3. Incur manufacturing overhead

(For Instructor Use Only)

Manufacturing Overhead (6) Overhead (3) Depreciation applied Insurance Repairs (4) Indirect materials used (5) Indirect labor used

Assignment 4. 5. 6. 7. 8.

Raw materials are used Factory labor is used Overhead is applied Completed goods are recognized Cost of goods sold is recognized

BRIEF EXERCISE 20-1

20-8 Raw Materials Inventory (1) Purchases (4) Materials used

BRIEF EXERCISE 20-2 Jan. 31 31

31

Raw Materials Inventory.............................................. Accounts Payable.................................................

4,000

Factory Labor ................................................................. Factory Wages Payable ...................................... Employer Payroll Taxes Payable.....................

5,000

Manufacturing Overhead ............................................ Utilities Payable ....................................................

2,000

4,000 4,200 800 2,000

BRIEF EXERCISE 20-3 Jan. 31

Work in Process Inventory......................................... Manufacturing Overhead ............................................ Raw Materials Inventory.....................................

2,800 600 3,400

BRIEF EXERCISE 20-4 Jan. 31

Work in Process Inventory......................................... Manufacturing Overhead ............................................ Factory Labor.........................................................

4,200 800 5,000

BRIEF EXERCISE 20-5

Date 1/31 1/31

Job 1 Direct Materials 900

Direct Labor 1,200

Date 1/31 1/31 Copyright © 2009 John Wiley & Sons, Inc.

Date 1/31 1/31 Job 3 Direct Materials 700

Job 2 Direct Materials 1,200

Direct Labor 1,600

Direct Labor 1,400

Weygandt, Accounting Principles, 9/e, Solutions Manual

(For Instructor Use Only)

20-9

BRIEF EXERCISE 20-6 Overhead rate per direct labor cost is 160%, or ($800,000 ÷ $500,000). Overhead rate per direct labor hour is $16, or ($800,000 ÷ 50,000). Overhead rate per machine hour is $8, or ($800,000 ÷ 100,000). BRIEF EXERCISE 20-7 Jan. 31

Feb. 28

Mar. 31

Work in Process Inventory ................................... Manufacturing Overhead ($40,000 X 90%) ...........................................

36,000

Work in Process Inventory ................................... Manufacturing Overhead ($30,000 X 90%) ...........................................

27,000

Work in Process Inventory ................................... Manufacturing Overhead ($50,000 X 90%) ...........................................

45,000

36,000

27,000

45,000

BRIEF EXERCISE 20-8 Mar. 31 31 31

Finished Goods Inventory .................................... Work in Process Inventory ..........................

55,000 55,000

Cash ............................................................................. Sales ....................................................................

35,000

Cost of Goods Sold................................................. Finished Goods Inventory............................

25,000

35,000 25,000

BRIEF EXERCISE 20-9 Dec. 31

Dec. 31

20-10

Lott Company Cost of Goods Sold................................................. Manufacturing Overhead..............................

1,500

Perez Company Manufacturing Overhead....................................... Cost of Goods Sold ........................................

900

Copyright © 2009 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 9/e, Solutions Manual

1,500

900

(For Instructor Use Only)

DO IT! 20-1 (a) Raw Materials Inventory .................................................... Accounts Payable ........................................................ (Purchases of raw materials on account)

13,000

(b) Factory Labor........................................................................ Factory Wages Payable.............................................. Employer Payroll Taxes Payable ............................ (To record factory labor costs)

40,000

(c) Manufacturing Overhead .................................................. Accumulated Depreciation........................................ Utilities Payable ............................................................ Prepaid Property Taxes.............................................. (To record overhead costs)

15,000

13,000

31,000 9,000

9,500 3,100 2,400

DO IT! 20-2 The three summary entries are: Work in Process Inventory ($7,200 + $9,000) ...................... Raw Materials Inventory .................................................... (To assign materials to jobs)

16,200

Work Process Inventory ($4,000 + $6,000) ........................... Factory Labor........................................................................ (To assign labor to jobs)

10,000

Work in Process Inventory ($5,200 + $7,800) ...................... Manufacturing Overhead .................................................. (To assign overhead to jobs)

13,000

Copyright © 2009 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 9/e, Solutions Manual

16,200

10,000

13,000

(For Instructor Use Only)

20-11

DO IT! 20-3 Finished Goods Inventory.......................................................... Work in Process Inventory................................................ (To record completion of Job 310, costing $60,000 and Job 312, costing $40,000)

100,000

Accounts Receivable ................................................................... Sales ......................................................................................... (To record sale of Job 312)

90,000

Cost of Goods Sold ...................................................................... Finished Goods Inventory................................................. (To record cost of goods sold for Job 312)

40,000

100,000

90,000

40,000

DO IT! 20-4 Manufacturing overhead applied = 150% X $85,000 = $127,500 Overapplied manufacturing overhead = $120,000 – $127,500 = $7,500

20-12

Copyright © 2009 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 9/e, Solutions Manual

(For Instructor Use Only)

EXERCISE 20-1 (a) Factory Labor.......................................................................... Factory Wages Payable .............................................. Employer Payroll Taxes Payable ............................. Employer Fringe Benefits Payable..........................

72,000 60,000 8,000 4,000

(b) Work in Process Inventory ($72,000 X 85%) ................. 61,200 Manufacturing Overhead .................................................... 10,800 Factory Labor.................................................................

72,000

EXERCISE 20-2 (a) May 31

31

31

31

Work in Process Inventory ............................. Manufacturing Overhead....................