23.Schulz Corporation applies overhead based upon machine-hours. Budgeted factory overhead was
$266,400 and budgeted machine-hours were 18,500. Actual factory overhead was $287,920 and
actual machine-hours were 19,050. Before disposition of under/overapplied overhead, the cost of
goods sold was $560,000 and ending inventories were as follows:
Direct materials$ 60,000
WIP190,000
Finished goods 250,000
Total$500,000
Required:
a.Determine the budgeted factory overhead rate per machine-hour.
266400/18500 = $14.40 per machine hour
b.Compute the over/underapplied overhead.
19050*14.4 = 274320-287920 = $13600 under applied
c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold
approach.
Accounts
Debit
Cost of goods Sold
13600
Factory overhead under applied
or FOH control account
Credit
13600
d.Prepare the journal entry to dispose of the variance using the proration approach.
Accounts
Cost of goods Sold
WIP
Debit
7616
2584
Finished goods``
3400
Factory overhead under applied
or FOH control account
Credit
13600
29.Four Seasons Company makes snow blowers. Materials are added at the beginning of the process
and conversion costs are uniformly incurred. At the beginning of September, work in process is 40%
complete and at the end of the month it is 60% complete. Other data for the month include:
Beginning work-in-process inventory 1,600 units
Units started2,000 units
Units placed in finished goods3,200 units
Conversion costs$200,000
Cost of direct materials$260,000
Beginning work-in-process costs:
Materials$154,000
Conversion$ 82,080
Required:
a.Prepare journal entries to record transferring of materials to processing and from processing to
finished goods assuming the weighted-average method.
Accounts
WIP
Debit
260000
Material Inventory
Finished Goods
Credit
260000
630400
WIP
630400
D.M
260000+154000/3600 = 115
CC
200000+82080/3440 = 82
Total cost to complete =197
3200*197 = 630400
30. Pet Products Company uses an automated process to manufacture its pet replica products. For
June, the company had the following activities:
Beginning work in process inventory 4,500 items,1/4 complete
Units placed in production15,000 units
Units completed17,500 units
Ending work in process inventory 2,000 items, 3/4 complete
Cost of beginning work in process$5,250
Direct material costs, current$16,500
Conversion costs, current$23,945
Direct materials are placed into production at the beginning of the process and conversion costs are
incurred evenly throughout the process.
Required:
a. Compute the equivalent units for materials and conversion costs.
Materials = 17500-4500 +2000 = 15000
Conversion = 17500-4500+4500*3/4 +2000 *3/4 = 17875
Current unit cost
16500/15000 = 1.1
23945/17875 = 1.35
b.Compute the dollar value of the ending inventory.
Material = 2000 x 1.1 =2200
CC
= 1500 *1.35 = 2025
Total inventory value = 4225
39. Bagley Company has two service departments and two producing departments. Square footage of
space occupied by each department follows:
Custodial services1,000 ft
General administration3,000 ft
Producing department A8,000 ft
Producing department B8,000 ft
20,000 ft
The department costs of Custodial Services are allocated on a basis of square footage of space. If
Custodial Services costs are budgeted at $38,000, the amount of cost allocated to General
Administration under the direct method would be?
Nil as no service department cost is allocated to another service department under this method.
Answer the following questions 40-41 using the information below:
The RAH Manufacturing Company has two service departments: Maintenance and Accounting. The
Maintenance Department's costs of $300,000 are allocated on the basis of machine hours. The
Accounting Department's costs of $120,000 are allocated on the basis of the number of employees
within a specific department. The direct departmental costs for A and B are $300,000 and $500,000,
respectively.
MaintAcctgAB Machine hours
Number of employees
480
2
202,`300
2
8
200
4
40. What is the Maintenance Department's cost allocated to Department B using the step method and
assuming the Maintenance Department's costs are allocated first?
200/702 x 300000 =85470
41. What is the cost of the Accounting Department's cost allocated to Department A using the step
method and assuming the Maintenance Department's costs are allocated first?
Cost of maintenance to accounting = 202/702 * 300000 = 86325
Total accounting cost -= 120000+86325 = 206325
To department A = 8/12 *206325 = 137550