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ACC560 Week 2 E2-4 E2-9 E2-11 E2-12 P2-1A P2-5

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E2-4 Manufacturing cost data for Orlando Company, which uses a job order cost system,
are presented below.


Instructions
Indicate the missing amount for each letter. Assume that in all cases manufacturing overhead
is applied on the basis of direct labor cost and the rate is the same.

E2-9 At May 31, 2014, the accounts of Mantle Company show the following.
1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials
$8,200.
2. May 31 inventories—finished goods $9,500, work in process $17,900, and raw materials
$7,100.
3. Debit postings to work in process were direct materials $62,400, direct labor $50,000,
and manufacturing overhead applied $40,000.
4. Sales revenue totaled $210,000.

Instructions
(a) Prepare a condensed cost of goods manufactured schedule.
(b) Prepare an income statement for May through gross profit.
(c) Indicate the balance sheet presentation of the manufacturing inventories at May 31,
2014.

E2-11 Shown below are the job cost related accounts for the law firm of Jack, Bob, and
Will and their manufacturing equivalents:



Cost data for the month of March follow.
1. Purchased supplies on account $1,500.
2. Issued supplies $1,200 (60% direct and 40% indirect).
3. Assigned labor costs based on time cards for the month which indicated labor costs of
$60,000 (80% direct and 20% indirect).
4. Operating overhead costs incurred for cash totaled $40,000.
5. Operating overhead is applied at a rate of 90% of direct attorney cost.
6. Work completed totaled $75,000.

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

E2-12 Don Lieberman and Associates, a CPA firm, uses job order costing to capture the
costs of its audit jobs. There were no audit jobs in process at the beginning of November.
Listed below are data concerning the three audit jobs conducted during November.



Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined
overhead rate is $50 per auditor hour. The Lynn job is the only incomplete job at the end
of November. Actual overhead for the month was $11,000.
Instructions
(a) Determine the cost of each job.
(b) Indicate the balance of the Service Contracts in Process account at the end of November.
(c) Calculate the ending balance of the Operating Overhead account for November.

P2-1A Degelman Company uses a job order cost system and applies overhead to production
on the basis of direct labor costs. On January 1, 2014, Job No. 50 was the only job in
process. The costs incurred prior to January 1 on this job were as follows: direct materials
$20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job
No. 49 had been completed at a cost of $90,000 and was part of finished goods inventory.
There was a $15,000 balance in the Raw Materials Inventory account.
During the month of January, Degelman Company began production on Jobs 51 and
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 $70,000. Of this amount $16,000 related to employer
payroll taxes.
3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect
labor $20,000; depreciation expense on equipment $19,000; and various other manufacturing
overhead costs on account $16,000.
4. Assigned direct materials and direct labor to jobs as follows.

Job No.Direct materialsDirect Labor
50 10,000 5,000
51 39,000 25,000
52 30,000 20,000

Instructions
(a) Calculate the predetermined overhead rate for 2014, assuming Degelman Company
estimates total manufacturing overhead costs of $980,000, direct labor costs of
$700,000, and direct labor hours of 20,000 for the year.
(b) Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job
cost sheet for Job No. 50.
(c) Prepare the journal entries to record the purchase of raw materials, the factory labor
costs incurred, and the manufacturing overhead costs incurred during the month of January.
(d) Prepare the journal entries to record the assignment of direct materials, direct labor,
and manufacturing overhead costs to production. In assigning manufacturing overhead
costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.
(e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal
entry (or entries) to record the completion of any job(s) during the month.
(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
(g) What is the balance in the Finished Goods Inventory account at the end of the month?
What does this balance consist of?
(h) What is the amount of over- or underapplied overhead?

P2-5A Rodman Corporation’s fiscal year ends on November 30. The following accounts
are found in its job order cost accounting system for the first month of the new fiscal year.



Other data:
1. On December 1, two jobs were in process: Job No. 154 and Job No. 155. These jobs had
combined direct materials costs of $9,750 and direct labor costs of $15,000. Overhead
was applied at a rate that was 75% of direct labor cost.

2. During December, Job Nos. 156, 157, and 158 were started. On December 31, Job
No. 158 was unfinished. This job had charges for direct materials $3,800 and direct
labor $4,800, plus manufacturing overhead. All jobs, except for Job No. 158, were completed
in December.
3. On December 1, Job No. 153 was in the finished goods warehouse. It had a total cost of
$5,000. On December 31, Job No. 157 was the only job finished that was not sold. It had
a cost of $4,000.
4. Manufacturing overhead was $230 overapplied in December.

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

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