Sol ch03
Sol ch03
Sol ch03
3-4
3-9
The difference between actual and normal costing systems involves the
procedure for applying manufacturing overhead to Work-in-Process
Inventory. Under actual costing, applied overhead is the product of the
actual overhead rate (computed at the end of the period) and the actual
amount of the cost driver used. Under normal costing, applied overhead is
the product of the predetermined overhead rate (computed at the
beginning of the period) and the actual amount of the cost driver used.
3-16
Process
2.
Job-order
3.
4.
Process
5.
Process
6.
Job-order
7.
Process
8.
9.
Process
10.
Job-order
TB78
Description
Date Started
8/11
Date Completed
teddy bears
8/20
Date
8/11
8/12
Unit Price
$.90
.40
Cost
$450
240
Rate
$14
Cost
$7,700
Direct Labor
Hours
550
Date
8/15
Date
8/15
Manufacturing Overhead
Activity Base
Quantity
direct-labor hours
550
1,000
Application Rate
$3
Cost
$1,650
Cost Summary
Cost Item
Total Direct Material
Total Direct Labor
Total Manufacturing Overhead
Total Cost
Unit Cost
Date
Amount
$ 690
7,700
1,650
$10,040
$ 10.04
Shipping Summary
Units Remaining
Units Shipped
In Inventory
Cost Balance
8/30
800
200
$2,008*
3.
Total
manufacturing
cost
$1,250,000
work-in-process
inventory,
Jan. 1
.75X
work-in-process
inventory,
Dec. 31
X
cost of
goods
manufactured
= $1,212,500
.25X = $1,250,000 $1,212,500
X = $150,000
Raw material:
Beginning inventory...................................................................................
Add: Purchases..........................................................................................
Deduct: Raw material used........................................................................
Ending inventory........................................................................................
$142,000
?
652,000
$162,000
$672,000
Direct labor:
Total manufacturing cost...........................................................................
Deduct: Direct material..............................................................................
Direct labor and manufacturing overhead................................................
3.
4.
$1,372,000
652,000
$ 720,000
=
=
=
$720,000
$720,000
$720,000
Direct labor
$720,000
1.6
Direct labor
$450,000
$ 160,000
1,372,000
?
$ 60,000
$1,472,000
$ 180,000
1,472,000
?
$ 220,000
$1,432,000
1.
$650,000
20,000 machine hours
(b)
$650,000
25,000 direct - labor hours
(c)
$650,000
$325,000 *
Actual
manufacturing
overhead
applied
manufacturing
overhead
overapplied or
underapplied
overhead
(a)
$690,000 (22,000)($32.50)
(b)
$690,000 (26,000)($26.00)
(c)
$690,000 ($364,000)(200%)
Work-in-Process Inventory.......................................................
Manufacturing Overhead................................................
690,000
Work-in-Process Inventory.......................................................
Manufacturing Overhead................................................
715,000*
690,000
715,000
2.
actual
manufacturing
applied
manufacturing
$250,000
21,000
82,000
220,000
61,000
34,000
310,000
80,000
$1,058,000
overhead
overhead
=
overhead
Manufacturing Overhead............................................................
Cost of Goods Sold..........................................................
4.
21,000
21,000
In the electronic version of the solutions manual, press the CTRL key and click
on the following link: 10E - BUILD A SPREADSHEET 03-35.XLS
NOTE: Budgeted selling and administrative expense, although given in the exercise, is
irrelevant to the solution.
3.
4.
Since there is no work in process at year-end, all amounts in the Work-inProcess account must be transferred to Finished-Goods Inventory. Thus:
Finished-Goods Inventory.......................................7,880,900*
Work-in-Process Inventory..........................
....................................................................................7,880,900
*Beginning balance in Work-in-Process Inventory + additions to the
account:
$78,400 + $7,802,500 = $7,880,900
5.
50,500
50,500
6.
7.
0
7,880,900
$ 7,880,900
175,750
$ 7,705,150
50,500
$ 7,654,650
2.
(a)
(b)
(c)
(d)
247,500
3.
Job no. 103 and no. 104 are in production as of March 31:
Job 103: $92,000 + $140,000 + (5,000 x $55.00)..................$507,000
Job 104: $33,000 + $19,200 + (2,000 x $55.00).................... 162,200
Total...........................................................................$669,200
4.
5.