Exercises Chapter 3 Costing Solutions
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This document contains 9 journal entries related to the manufacturing cost accounting cycle for 3 jobs. It records materials, labor, and overhead being charged to Work in Process accounts for each job. It also records payroll expenses and taxes, and the application of overhead to production using a predetermined overhead rate of 80%.
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Exercises Chapter 3 Costing Solutions
- 1. Exercises Chapter 3 1. Manufacturing Costs 1 FOH Rate to Direct Labour Direct Labour= 800000 FOH = 640000 FOH Rate= 80% 2 Work in Process Ending = 140000 Less Direct Labour= 50000 FOH 80% of Labour 40000 90000 Direct Material Cost 50000 2. Manufacturing Costs Direct Material Cost= 280000 Direct Labour Cost= 320000 FOHCosts Indirect Labour= 80000 Indirect Material= 20000 Other FOH= 124000 224000 Total Manufacturing Costs= 824000 Coversion Cost= 544000 Rate of Direct Labour = 0.5882353 Closing Finished Goods= 176000 Less Direct Material Cost= 40000 Conversion cost= 136000 Labour Cost= 80000 FOH Cost 56000 3. Manufacturing Costs Televane Company Cost of goods Manufactured and Sold Statement For the Period ended on 31st, December 19b
- 2. Description Amount $ $ $ Direct Material Opening Inventory of Raw Material 75 1 AddPurchases 336 Cost of Material Available for use 411 Less: Closing Inventory of Raw Material 85 Direct Material Used 326 Direct Labour Cost 225 Factory over head Cost 135 Total Manufacturing Cost 686 Add Opening Work in Process Inventory 80 Cost of goods to be manufactured 766 Less: Closing Work in process Inventory 30 2 Cost of Goodsmanufactured 736 Add Opening Finished Goods Inventory 90 Cost of goods available for sale 826 Less: Closing Finished Goods Inventory 110 3 Cost of GoodsSold 716 4. Manufacturing Costs Krieger Company Material Cost= 13000 Direct Labour Cost= 15000 Factor Over Head = Molding Department=2.7* 1000= 2700 Decorating Department= 5250 7950 1 Estimated Cost to Produce= 35950 Mark Up= 16177.5 2 Bid Price= 52127.5 3 Estimate Prime Cost= 28000 4 Estimate Coversion Cost= 22950
- 3. 5. Income Statement Hansford Inc. Income Statement For the Period ended on 30th, September Description Amount $ $ $ Sales 182000 Direct Material Opening Inventory of Raw Material 7000 Add Purchases 42300 Cost of Material Available for use 49300 Less: Closing Inventory of Raw Material 7400 Direct Material Used 41900 Direct Labour Cost 30000 Factory over head Cost 45000 Total Manufacturing Cost 116900 Add Opening Work in Process Inventory 9600 Cost of goods to be manufactured 126500 Less: Closing Work in process Inventory 13000 1 Cost of Goodsmanufactured 113500 Add Opening Finished Goods Inventory 15000 Cost of goods available for sale 128500 Less: Closing Finished Goods Inventory 17500 Cost of Goods Sold at Normal 111000 Add/Less FOH Variance 3200 Cost of Goods Sold at actual 114200 Gross Profit 67800 Less Operating Expenses Marketing Expenses 14100 Admn Expenses 22900 Total Expenses 37000 Net Profit 30800 6. Job Order cost Sheet. Wadsworth Machine Works Job Order Cost Sheet
- 4. Direct Material Cost 9/14 Issued 600 9/20 Issued 331 9/22 Issued 200 Total 1131 Direct LabourCost week of Sept 20 90 Hrs @$6.20 Hrs 558 week of Sept 26 70 Hrs @$7.30 Hrs 511 Total 1069 Factory Overhead week of Sept 20 90 Hrs @$5 Hrs 450 week of Sept 26 70 Hrs @$5 Hrs 350 Total 800 Total Cost of Manufacturing 3000 Mark UP 40% 1200 Sale Price 4200 7. Job Order Costing Amount Date Description P.R Debit($) Credit($) a Work in Process Job 36 Job Cost Sheet 44000 Work in Process Job 37 Job Cost Sheet 34000 Work in Process Job 38 Job Cost Sheet 32000 Material Control Store Ledger Card 110000 Direct Material issued to Production b Work in Process Job 36 Job Cost Sheet 40000 Work in Process Job 37 Job Cost Sheet 48000 Work in Process Job 38 Job Cost Sheet 42000 Payroll Control Pay roll sheet 130000 Payroll distributed to work in process c Work in Process Job 36 Job Cost Sheet 24000 Work in Process Job 37 Job Cost Sheet 28800
- 5. Work in Process Job 38 Job Cost Sheet 25200 FOH Applied FOH analysis 78000 FOH applied to Production d Finished Job 36 Job Cost Sheet 144000 Finsihed Job 37 Job Cost Sheet 128800 Work in Process Job 36 Job Cost Sheet 144000 Work in Process Job 37 Job Cost Sheet 128800 Job No 36 & 37 Completed 8. Job Order Costing. Date Description P.R Debit($) Credit($) a Work in Process Job 97 36000 Work in Process Job 98 30000 Work in Process Job 99 40000 Material Control 106000 Direct Material issued to Production b Work in Process Job 97 72000 Work in Process Job 98 70000 Work in Process Job 99 80000 Payroll Control 222000 Payroll distributed to work in process c Work in Process Job 97 36000 Work in Process Job 98 35000 Work in Process Job 99 40000 FOH Applied 111000 FOH applied to Production d Finished Job 97 240000 Finsihed Job 98 135000 Work in Process Job 97 240000 Work in Process Job 98 135000 Job No. 36 & 37 Completed e Cost of Sales Job No. 97 240000 Finished Job 97 240000 Cost of Sale of Job No 97 recorded
- 6. f Accounts Receivables 300000 Sales 300000 Job No. 97 Sold on account 9. Journal entries for the Cost Accounting cycle: Predetermied Overhead rate Ledger Accounts 1 Finished Goods 2 Work in Process Opening 40000 O/b 35000 CGS 375000 Material 90000 F.Goods 390000 WIP 390000 Labour 160000 Closing 55000 FOH 120000 Closing 15000 430000 430000 405000 405000 3 Material 4 Factor Over HeadControl O/B 5000 Applied 120000 WIP 90000 Sundry 117000 Purchases 95000 CGS 3000 CGS Closing 10000 Closing 0 120000 120000 100000 100000 5 AppliedFOH 6 Cost of GoodsSold at Normal Opening 400000 O/B 600000 WIP 120000 F.Goods 375000 FOH Closing 520000 520000 520000 Closing Closing 975000 975000 975000 6 Cost of GoodsSold at actual O/B 600000 foh 3000 F.Goods 375000 Closing Closing 972000 975000 975000 Amount
- 7. Date Description P.R Debit($) Credit($) a Work in Process Control 370000 Material Contorl 90000 Payroll Control 160000 FOH Applied 120000 Material Labour & FOH Charged to Production b Finished Goods 390000 Work in Process Control 390000 Work in Process Completed and transferred to Finished goods c Cost of Goods Sold 375000 Finished Goods 375000 Cost of Goods Sold Recorded d FOH Applied 3000 Cost of Goods Sold 3000 Under applied FOH Recorded e Material Control 95000 Voucher Payable 95000
- 8. Problems Chapter 3 3.1 Manufacturing Costs Hulse Company Cost of Goods Sold Statement For the Period ended on 31st, December Description Amount $ $ $ Direct Material Opening Inventory of Raw Material 20000 Add Purchases 58000 Cost of Material Available for use 78000 Less: Closing Inventory of Raw Material 18000 Direct Material Used 60000 Direct Labour Cost Grinding Department 8000*5.6 44800 Machining Department 4600*6 27600 72400 Factory over head Cost Grinding Department 8000*6 48000 Machining Department 4600*8 36800 84800 1 Total Manufacturing Cost 217200 Add Opening Work in Process Inventory 15000 Cost of goods to be manufactured 232200 Less: Closing Work in process Inventory 17600 2 Cost of Goodsmanufactured 214600 Add Opening Finished Goods Inventory 22000 Cost of goods available for sale 236600 Less: Closing Finished Goods Inventory 17000 3 Cost of GoodsSold 219600 4 Coversion Cost 157200 5 Cost of Material Purchased 58000 3.1 Ledger Accounts 1 Material Control 4 Work in process O/B 20000 WIP 60000 O/b 15000
- 9. Purchases 58000 FOH app 84800 F Goods 214600 Payroll 72400 Closing 18000 material 60000 Closing 17600 232200 232200 78000 78000 5 Finished Goods Opening 22000 2 Accrued Payroll CGS (5) 219600 V/Payable 72400 WIP G.Dept 44800 WIP 214600 WIP M.Dept 27600 Closing 17000 236600 236600 72400 72400 3 FOHApplied 6 Cost of GoodsSold FOH Control 84800 WIP G.Dept 48000 F.Goods 219600 WIP M.Dept 36800 84800 84800 219600 0 3 FOHControal FOH App 84800 0 84800 1 Total Cost of Work put into process Material 84800 Labour 72400 FOH 60000 Total Manufacturing cost 217200 2 Add Opeing WIP 15000 Goods to be Manufactured 232200 Less Closing WIP 17600 Cost of Goods Mfgd 214600 3 add opeing F. goods 22000 Cost of Goods to be sold 236600 Less Closing F.goods 17000 Cost of Goods Sold 219600 4 Conversion Cost Direct MaterIal 72400
- 10. Applied FOH 60000 132400 5 Material Control O/B 20000 WIP 60000 Purchases 58000 Closing 18000 78000 78000 3.2 Manufacturing Costs Ledger Accounts 1 Finished Goods 2 Work in process Opening 70000 O/b 50000 CGS (5) 230000 2 FOH app 75000 F Goods 220000 (4) WIP 220000 Payroll 100000 Closing 60000 1 material 35000 Closing* 40000 (3) 290000 290000 260000 260000 Closing WIP= 5000+15000+20000 3 Material Control 4 Cost of GoodsSold O/B 10000 WIP 35000 F.Goods 230000 a 50000 FOH Cont 5000 Closing 25000 C/B 235000 235000 235000 60000 60000 5 Accrued Payroll 6 FOHControal Payed 140000 Opening 10000 Acc Dep 10000 FOH App 75000 Direct Lab 100000 Payroll 50000 Closing 20000 IndLab 50000 Sundry acc 20000 CGS 5000 160000 150000 80000 80000 7 FOHApplied 8 Accounts Payables O/B 20000 FOH Cont 75000 WIP 75000 Cash 55000 Purchases 50000
- 11. Closing 15000 75000 75000 70000 70000 Problem 3-3 1) Cost of goods sold section Columbus Company Cost of Goods Sold Statement For the Period ended on 31st October Description Amount $ $ $ Direct Material Opening Inventory of Raw Material 40700 Add Purchases 24800 Cost of Material Available for use 65500 Less: Closing Inventory of Raw Material 35700 Direct Material Used 29800 Direct Labour Cost 18600 Factory over head Cost 27450 Total Manufacturing Cost 75850 Add Opening Work in Process Inventory 4070 Cost of goods to be manufactured 79920 Less: Closing Work in process Inventory 4440 1 Cost of Goodsmanufactured 75480 75180/20400 3.7 Add Opening Finished Goods Inventory 9800 Cost of goods available for sale 85280 Less: Closing Finished Goods Inventory 9250 (2800+20400-20700) 2500 Cost of Goods Sold at Normal 76030 2. Income Statement for October Columbus Income Statement For the Period ended on 31st October Description Amount $ $ $ Sales 144900 Less returns 1300
- 12. Net Sales 143600 Cost of Goods Sold at Normal 76030 Gross Profit 67570 Less Operating Expenses Marketing Expenses Paid 25050 Dep Building 360 Dep Equipment 192 25602 Admn Expenses Paid 19700 Dep Building 240 Dep Equipment 288 20228 Total Expenses 45830 Net Profit 21740 3 Over /Under Applied FOH FOH Control Account V/P 20100 FOH Applied 27450 Material Control 3950 Dep on Building 1800 Dep on M & Equip 9600 CGS 12400 Indirect Laobur 4400 39850 39850 Problem 3-4 Morrisville Canning Income Statement For the Period ended on 31st, December 19 A Description Amount $ $ $ Sales 60000 Direct Material Opening Inventory of Raw Material 4000 Add Purchases 15000
- 13. Cost of Material Available for use 19000 Less: Closing Inventory of Raw Material 2000 Direct Material Used 17000 Direct Labour Cost 9000 Factory over head Cost 9000 Total Manufacturing Cost 35000 Add Opening Work in Process Inventory 2000 Cost of goods to be manufactured 37000 Less: Closing Work in process Inventory 1000 1 Cost of Goodsmanufactured 36000 Add Opening Finished Goods Inventory 6000 Cost of goods available for sale 42000 Less: Closing Finished Goods Inventory 4000 Cost of Goods Sold at Normal 38000 Add/Less FOH Variance 2000 Cost of Goods Sold at actual 40000 Gross Profit 20000 Less Operating Expenses Marketing Expenses 6000 Admn Expenses 9000 Total Expenses 15000 Net Profit 5000 Cash Account O/B 5000 Material 15000 Sales 60000 Labour 9000 FOH 8000 (9000+2000-3000) Admn Exp 6000 Marketing Exp 8000 C/B 19000 65000 46000 Morrisville Canning Company Balance Sheet As on 31st December, 19A Assets $ Liabilities & Equities $ Cash 19000 Current Liabilites 17500
- 14. Accounts Receivables 10000 Common Stock 30000 Finished Goods 4000 Retained Earnings 10000 Work in Process 1000 Profit 5000 15000 Materials 2000 Prepaid expenses 500 Property Plant etc 30000 Less Depreciation 4000 26000 62500 62500 Problem 5 Date Description P.R Debit($) Credit($) a Material Control 6000 Voucher Payable 6000 b WIP Job 2001 2500 WIP Job 2002 1400 Material Control 3900 c WIP Job 2003 1800 Material Control 1800 d FOH Control 1700 Material Control 1700 e Material Control 500 WIP Job 2001 400 FOH Control 100 f Voucher Payble 600 Material Control 600 g Pay Roll Control 10000 FICA taxes Payable 750 Fedral Income tax Payable 1050 Accrued Payroll 8200 h Accrued Payroll 8200 Voucher Payable 8200 Voucher Payable 8200 Bank 8200
- 15. i 60% WIP Job 2001 50% 3000 WIP Job 2002 30% 1800 WIP Job 2003 20% 1200 20% FOH Control 2000 12% Sales ExpControl 1200 8% Admn ExpControl 800 Payroll Control 10000 j 80% FOH Control 936 (8000/10000)*1170 12% Sales ExpControl 140.4 (1200/10000)*1170 8% Admn ExpControl 93.6 (800/10000)*1170 7.5% FICA Tax payable 750 3.4% State Unemp Tax payble 340 0.8% Fed. Unemp Tax payble 80 1170 k FOH Control 1504 Voucher Payable 1504 Voucerh Payable 1504 Bank 1504 l WIP Job 2001 3000 WIP Job 2002 1800 WIP Job 2003 1200 FOH Applied 6000 FOH Applied 6000 FOH Control 6000 WIP Job 2001 O/B 10000 Material Control 400 Material Control 2500 Finished Goods 18100 Payroll Control 3000 FOH Applied 3000 18500 18500 m Cost of Goods Sold 18100 WIP Job 2001 18100 Accounts Receivable 22500 Sales 22500
- 16. n Cost of Goods Sold 8000 Finished Goods 8000 Accounts Receivable 10000 Sales 10000 o Cash 26000 Accounts Recivable 26000 FOH Controll Acoount m 1700 mat 100 p 2000 foh app 6000 payroll tax 936 cgs 40 vp 1504 6140 6140 p Cost of Goods Sold 40 Foh Control 40 Requirement: 1 Journal Entries as above with WIP Job Nos as subsidiary Accounts 2 Prepare Individual JOB WIP Account they should be equal to WIP Control Account. WIP Control Account OB 16400 e Material 400 b Material 3900 c Material 1800 i Payroll 6000 l Foh app 6000 c/b 33700 34100 33700 WIP Job # 2001 OB 10000 e Material 400 b Material 2500 i Payroll 3000 l Foh app 3000 c/b 18100 18500 18100
- 17. WIP Job # 2002 OB 6400 b Material 1400 i Payroll 1800 l Foh app 1800 c/b 11400 11400 11400 WIP Job # 2003 OB 0 e Material 100 c Material 1800 i Payroll 1200 l Foh app 1200 c/b 4100 4200 4100 WIP Job # 2001 18100 WIP Job # 2002 11400 WIP Job # 2003 4100 WIP Control Account 33600 Problem 6 Job Order cost Sheet. TopperInc. Job Order Cost Sheet Job NO 621 Direct Material Cost 1-Mar O/B 2800 Issued Issued Total 2800 Direct LabourCost 1-Mar O/B 2100 Total 2100
- 18. Factory Overhead 1-Mar O/B 1680 Total 1680 Total Cost of Manufacturing 6580 Mark UP Sale Price TopperInc. Job Order Cost Sheet Job NO 622 Direct Material Cost 1-Mar O/B 3400 Issued Issued Total 3400 Direct LabourCost 1-Mar O/B 2700 Total 2700 Factory Overhead 1-Mar O/B 2160 Total 2160 Total Cost of Manufacturing 8260 Mark UP Sale Price TopperInc. Job Order Cost Sheet Job NO 623 Direct Material Cost 1-Mar O/B 1800 Issued Issued Total 1800 Direct LabourCost 1-Mar O/B 1350
- 19. Total 1350 Factory Overhead 1-Mar O/B 1080 Total 1080 Total Cost of Manufacturing 4230 Mark UP Sale Price Date Description P.R Debit($) Credit($) a Material Control 22000 Voucher Payable 22000 b WIP Job 621 5300 WIP Job 622 7400 WIP Job 623 5900 FOH Control 2400 Material Control 21000 c Material Control 600 WIP 622 400 FOH Control 200 d Voucher Payble 800 Material Control 800 e Pay Roll Control 38000 7.50% FICA taxes Payable 2850 11.50% Fedral Income tax Payable 4370 81% Accrued Payroll 30780 Accrued Payroll 30780 Voucher Payable 30780 Voucher Payable 8200 Bank 8200 f
- 20. 55% WIP Job 621 6420 0.307177 WIP Job 622 8160 0.390431 WIP Job 623 6320 20900 0.302392 20% FOH Control 7600 15% Sales ExpControl 5700 10% Admn ExpControl 3800 Payroll Control 38000 g 75% FOH Control 5956.50 15% Sales ExpControl 1191.30 10% Admn ExpControl 794.20 7.5% FICA Tax payable 2850.0 5.4% State Unemp Tax payble 2052.0 8.0% Fed. Unemp Tax payble 3040.0 7942 h FOH Control 5500 Voucher Payable 3250 Acc.Dep Factory Building 2000 Prepaid Insurance 250 l WIP Job 2001 5136 WIP Job 2002 6528 WIP Job 2003 5056 80% dlc20900 FOH Applied 16720 FOH Applied 16720 FOH Control 16720 Material WIP Job 621 5300 O/B 14000 WIP Job 622 7400 V. Payable 22000 WIP Job 623 5900 WIP 622 400 FOH Control 2400 FOH Control 200 V/P 800 C/B 14800 36600 36600 Work in Process O/B 19070 Material Control 400 Material Control 18600 Finished Goods 53384 Payroll Control 20900
- 21. FOH Applied 16720 C/B 21506 75290 53784 Finished Goods O/B 15000 Cost of Goods Sold 53384 WIP 53384 C/B 15000 68384 53384 WIP Job 621 O/B 6580 Material Control 5300 Payroll Control 6420 FOH Applied 5136 Fiinshed Goods 23436 23436 23436 WIP Job 622 O/B 8260 Material Contrl 400 Material Control 7400 Payroll Control 8160 FOH Applied 6528 Fiinshed Goods 29948 30348 30348 WIP Job 623 O/B 4230 Material Control 5900 Payroll Control 6320 FOH Applied 5056 C/B 21506 21506 21506 j Finished Goods 53384
- 22. WIP Job 621 23436 WIP Job 622 29948 k Accounts Receivable 74737.6 Sales 74737.6 l Cash 69450 Accounts Recivable 69450 Job Order cost Sheet. TopperInc. Job Order Cost Sheet Job NO 621 Direct Material Cost 1-Mar O/B 2800 Current 5300 Total 8100 Direct LabourCost 1-Mar O/B 2100 Current 6420 Total 8520 Factory Overhead 1-Mar O/B 1680 Current 5136 Total 6816 Total Cost of Manufacturing 23436 Mark UP 9374.4 Sale Price 32810.4 TopperInc. Job Order Cost Sheet Job NO 622 Direct Material Cost 1-Mar O/B 3400 Current 7000 Total 10400
- 23. Current Direct LabourCost 1-Mar O/B 2700 Current 8160 Total 10860 Factory Overhead 1-Mar O/B 2160 Current 6528 Total 8688 Total Cost of Manufacturing 29948 Mark UP 11979.2 Sale Price 41927.2 TopperInc. Job Order Cost Sheet Job NO 623 Direct Material Cost 1-Mar O/B 1800 Current 5900 Total 7700 Direct LabourCost 1-Mar O/B 1350 Current 6320 Total 7670 Factory Overhead 1-Mar O/B 1080 Current 5056 Total 6136 Total Cost up to date 21506 Sechdule of Inventories Materials 14800 Work in Process 21506 Finished Goods 15000
- 24. Problem 7 Finished Goods O/B 78830 CGS 94501.65 WIP 94501.65 C/B 78830.00 173331.7 173331.65 Work in Process O/B 292621 Finshed Goods 94501.65 Payroll Control 98884 Material Control 53730 C/B 381393.50 FOH Applied 30660.15 475895.2 475895.15 Material O/B 65000 WIP 53730 V/Payable 42300 V/Payable 5800 C/B 59370 113100 113100 FOH Control Prepaid Insurance 830 O/B 12300 Taxes Payable 845 FOH Applied 30660.15 Dep-Machinry 780 Dep-Building 840
- 25. V/Payalbe 8000 Indirect Supplies 1910 Pay roll control 12480 Employer taxes 15256.87 C/B 2018.28 42960.15 42960.15 WIP Job 204 O/B 50460 Finished Goods 94501.65 Payroll Control 26844 Material Control 9480 FOH Applied 7717.65 94501.65 94501.65 WIP Job205 O/B 118060 Payroll Control 22750 Material Control 11320 FOH Applied 7475 C/B 159605 159605 159605 WIP Job 206 O/B 124101 Payroll Control 28920 Material Control 10490 FOH Applied 8774.5 C/B 172285.5 172285.5 172285.5
- 26. WIP Job 207 O/B Payroll Control 20370 Material Control 22440 FOH Applied 6693 C/B 49503 49503 49503 Date Description P.R Debit($) Credit($) a Material Control 42300 Voucher Payable 42300 b Material Contorl 5800 Voucher Payable 5800 c WIP Job 204 26844 WIP Job 205 22750 WIP Job 206 28920 WIP Job 207 20370 FOH Control 12480 Payroll Control 111364 Payroll Contorl 111364 7.50% FICA Tax payable 8352.3 11.50% Emp Income Tax payable 12806.86 81% Accrued Payroll 90204.84 Accrd Payroll 90204.84 Voucher Payable 90204.84 d FOH Control 15256.87 7.5% FICA Tax payable 8352.3 5.4% State Unemp Tax payble 6013.7 0.8% Fed. Unemp Tax payble 890.9 15256.87 e WIP Job 204 9480
- 27. WIP Job 205 11320 WIP Job 206 10490 WIP Job 207 22440 Material Control 53730 f FOH Control Account 13205 Prepaid Insurance 830 Taxes Payable 845 Dep-Machinry 780 Dep-Building 840 V/Payalbe 8000 Indirect Supplies 1910 g WIP Job 204 2.3 3355.5 7717.65 WIP Job 205 2.3 3250 7475 WIP Job 206 2.3 3815 8774.5 WIP Job 207 2.3 2910 6693 FOH Applied 30660.15 FOH Applied 30660.15 FOH Control 30660.15 h A/R 117500 Sales 117500 Cost of Goods Sold 94501.65 Finished goods 94501.65 2 JOB O/B D.MaterialD.Labour FOH Total 204 50460 9480 26844 7717.65 94501.65 205 118060 11320 22750 7475 159605 206 124101 10490 28920 8774.5 172285.5 207 0 22440 20370 6693 49503 292621 53730 98884 30660.15 183274.2 3 Over Applied FOH 2018.28 Problem 8