Chapter 17 Practice
Question 1
Newton Corporation uses a job order costing system and allocates manufacturing
overhead at a rate of $25 per machine hour. During the period, the company used
600 machine hours and actually incurred manufacturing overhead costs of $14,500.
(a) Prepare a summary journal entry to record total manufacturing overhead
allocated to jobs during the period. Omit the "$" sign in your response.
General Journal
Work in Process Inventory
Debit
Credit
15,000
Manufacturing Overhead
15,000
(b) Prepare a summary journal entry to record actual overhead costs incurred
during the period (make the credit portion of the entry to "Various Accounts").
Omit the "$" sign in your response.
General Journal
Manufacturing Overhead
Debit
Credit
14,500
Various Accounts
14,500
(c) Prepare the journal entry to close the Manufacturing Overhead account directly
to Cost of Goods Sold at the end of the period. Omit the "$" sign in your
response.
General Journal
Manufacturing Overhead
Cost of Goods Sold
Debit
Credit
500
500
Question 2
Mayfield Corporation finished job no. 314 on June 1. On June 10, the company sold job no.
314 for $10,000, cash. Total manufacturing costs allocated to this job at the time of the sale
amounted to $6,500.
(a) Record the transfer of job no. 314 from Work in Process to Finished Goods on June 1.
Omit the "$" sign in your response.
Date
General Journal
6/1 Finished Goods Inventory
Debit
Credit
6,500
Work in Process Inventory
6,500
(b) Record the sale of job no. 314, and the transfer of its costs from Finished Goods, on June
10. Omit the "$" sign in your response.
Date
6/10 Cash
General Journal
Debit
Credit
10,000
Sales
10,000
Cost of Goods Sold
6,500
Finished Goods Inventory
6,500
Question 4
Swanson Corporation applies manufacturing overhead to jobs at a rate of $30 per direct labor
hour. During the current period, actual overhead costs totaled $175,000, and 6,000 direct
labor hours were worked by the company's employees.
Required:
(a) Record the journal entry to close the Manufacturing Overhead account directly to Cost of
Goods Sold at the end of the period. Omit the "$" sign in your response.
General Journal
Manufacturing Overhead
Cost of Goods Sold
(b)
Debit
Credit
5,000
5,000
Was manufacturing overhead overapplied, or was it underapplied? Omit the "$" sign in
your response.
Overapplied
by
$ 5,000
Question 5
Indicate whether job order costing is appropriate for each of the following businesses.
a.
b.
c.
d.
e.
f.
g.
h.
Old Home Bakery, Inc. (a bakery that
produces to order).
Baxter, Claxter, and Stone, CPAs.
Thompson Construction Company.
Satin Wall Paints, Inc.
Apache Oil and Gas Refinery.
Dr. Carr's Auto Body Shoppe.
Health-Rite Vitamins.
Shampoo Products International.
Appropriate
Appropriate
Appropriate
Not Appropriate
Not Appropriate
Appropriate
Not Appropriate
Not Appropriate
Question 6
For each of the accounts listed below, prepare two summary journal entries. In the first entry,
illustrate a transaction that would cause the account to be debited. In the second entry, illustrate
a transaction that would cause the account to be credited. Assume that perpetual inventory
records are maintained.
(a) Materials Inventory Omit the "$" sign in your response.
General Journal
Materials Inventory
Debit
XXX
Credit
XXX
Accounts Payable
Work in Process Inventory
XXX
Materials Inventory
(b) Direct Labor Omit the "$" sign in your response.
General Journal
Direct Labor
XXX
Debit
XXX
XXX
Cash
Work in Process Inventory
Credit
XXX
Direct Labor
XXX
(c) Manufacturing Overhead Omit the "$" sign in your response.
General Journal
Manufacturing Overhead
Debit
XXX
Credit
XXX
Cash
XXX
Work in Process Inventory
Manufacturing Overhead
XXX
(d) Finished Goods Inventory Omit the "$" sign in your response.
General Journal
Finished Goods Inventory
Debit
XXX
XXX
Work in Process Inventory
Cost of Goods Sold
XXX
Finished Goods Inventory
Question 7
(a) Production set-up costs
The number of set-ups required (or, perhaps, number of production runs)
(b) Heating costs
The square feet of production space occupied by each product line
(c) Machinery power costs
The total machine hours required to manufacture each product line
(d) Purchasing department costs
The number of purchase orders related to each product line
(e) Maintenance costs
The number of work orders related to each product line
Credit
XXX
(f) Design and engineering costs
The number of design or engineering change orders
(g) Materials warehouse costs
The percent of total square feet in the materials warehouse occupied by each product line
(number of component parts per product line)
(h) Product inspection costs
The number of inspections related to each product line (rate of defects)
Question 14
Blue Plate Construction organized in December and recorded the following transactions during
its first month of operations:
Dec. 2
Dec. 3
Dec. 9
Dec. 15
Dec. 28
Dec. 28
Dec. 29
Dec. 30
Dec. 31
Dec. 31
Purchased materials on account for $400,000.
Used direct materials costing $100,000 on job no. 100.
Used direct materials costing $150,000 on job no. 101.
Used direct materials costing $30,000 on job no. 102.
Applied the following direct labor costs to jobs: job no. 100, $9,000; job no. 101,
$11,000; job no. 102, $5,000.
Applied manufacturing overhead to all jobs at a rate of 300% of direct labor dollars.
Completed and transferred job no. 100 and job no. 101 to the finished goods
warehouse.
Sold job no. 100 on account for $200,000.
Recorded and paid actual December manufacturing overhead costs of $78,000, cash.
Closed the Manufacturing Overhead account directly to Cost of Goods Sold.
(a) Record each of the above transactions as illustrated on pages 775-779. Omit the "$" sign
in your response.
Date
General Journal
12/2 Materials Inventory
Debit
400,000
Accounts Payable
12/3 Work in Process Inventory
400,000
100,000
Materials Inventory
12/9 Work in Process Inventory
Credit
100,000
150,000
Materials Inventory
12/15 Work in Process Inventory
150,000
30,000
Materials Inventory
12/28 Work in Process Inventory
30,000
25,000
Direct Labor
12/28 Work in Process Inventory
25,000
75,000
Manufacturing Overhead
12/29 Finished Goods Inventory
75,000
330,000
Work in Process Inventory
12/30 Accounts Receivable
330,000
200,000
Sales
Cost of Goods Sold
200,000
136,000
Finished Goods Inventory
12/31 Manufacturing Overhead
136,000
78,000
Cash
12/31 Cost of Goods Sold
Manufacturing Overhead
78,000
3,000
3,000