Chapter 10 – Exercises
Exercise 14
a.
Factory 1: $16.75 per machine hour = $375,200 ÷ 22,400 machine hours
b. Factory 2: $9.50 per direct labor hour = $2,660,000 ÷ 280,000 direct labor
hours
c.
Factory 1:
Factory Overhead applied to production ($16.75 × 1,800 hrs.) ....
$30,150
Factory 2:
Factory Overhead applied to production ($9.50 × 24,000 hrs.) ....
$228,000
d. Factory 1: –$1,450 negative (overapplied) ($28,700 – $30,150)
Factory 2: $2,000 positive (underapplied) ($230,000 – $228,000)
e.
Factory overhead should be allocated using a base that is related to (causes)
the overhead costs to be incurred. Factory 1 has a manufacturing operation
that is machine intensive, while Factory 2 has a manufacturing operation that
is labor intensive. Thus, Factory 1 uses machine hours, while Factory 2 uses
direct labor hours to allocate factory overhead.
Exercise 17
a.
Cost of jobs completed and transferred to
Finished Goods:
$825,000*
*$180,000 + $225,000 + $140,000 + $280,000 = $825,000
b. Cost of unfinished jobs at October 31:
Balance in Work in Process at October 1 ..............
Add: Direct materials..............................................
Direct labor .....................................................
Factory overhead ...........................................
Less: Jobs finished during October .......................
Balance in Work in Process at October 31 ............
$ 42,600
360,000
400,400
107,000
$910,000
825,000
$ 85,000
Exercise 19
a.
BRIDGER BIKES INC.
Income Statement
For the Month Ended July 31, 20Y6
Revenues ............................................................................
Cost of goods sold .............................................................
Gross profit.........................................................................
Selling expenses ................................................................
Administrative expenses ...................................................
212,500
Income from operations ....................................................
b.
$918,000
550,000
$368,000
$132,500
80,000
$ 155,500
Materials inventory:
Purchased materials ...............................................
Less: Materials used in production .......................
Materials inventory, July 31 ....................................
$340,000
329,000
$ 11,000
Work-in-process inventory:
Materials used in production ..................................
Direct labor...............................................................
Factory overhead (80% × $160,000) .......................
Additions to work in process .................................
Less: Transferred to finished goods .....................
Work-in-process inventory, July 31 .......................
$329,000
160,000
128,000
$617,000
590,000
$ 27,000
Finished goods inventory:
Transferred to finished goods ................................
Less: Cost of goods sold ........................................
Finished goods inventory, July 31 .........................
$590,000
550,000
$ 40,000
Exercise 29
a.
A
B
1
2
3
4
5
6
7
8
Activity
Room and
meals
Radiology
Pharmacy
Chemistry lab
Operating
room
Total cost
Activity
Usage ×
2 days
4 images
6 orders
2 tests
0.9 hr.
C
Patient Mims
Activity
Rate
$125/day
$180/image
$15/order
$90/test
$1,200/hour
D
=
Activity
Cost
$ 250
720
90
180
1,080
$2,320
E
F
G
Patient Slater
Activity
Activity
Activity
Usage ×
Rate
= Cost
4 days
$125/day
$ 500
7 images
10 orders
5 tests
3.1 hrs.
$180/image
$15/order
$90/test
$1,200/hour
1,260
150
450
3,720
$6,080
b. Patient Slater apparently had a more serious condition than did Patient Mims.
Patient Mims required less operating room hours, fewer tests and images,
and fewer days to recover than did Patient Slater. Thus, the activity cost to
Patient Mims is nearly one-third that of Patient Slater.
Chapter 10 – Problems
Problem 1
Cost
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
u.
v.
w.
x.
y.
z.
Direct
Materials
Cost
Product Costs
Direct
Labor
Cost
Period Costs
Factory
Overhead
Cost
Selling Administrative
Expense
Expense
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Problem 4
1.
Supporting calculations:
Job No.
Quantity
May 1
Work in
Process
Direct
Materials
Direct
Labor
Factory
Overhead
No. 0521
100
$1,500
$ 5,000
$ 15,000
No. 0522
200
4,000
8,500
26,000
31,200
No. 0523
100
3,500
8,000
9,600
No. 0524
125
7,500
25,000
30,000
No. 0525
90
5,600
17,500
21,000
No. 0526
70
2,000
4,500
5,400
$32,100
$96,000
Total
685
$5,500
Total
Cost
Unit
Cost
$ 18,000 $ 39,500 $395.00
Cost of
Goods
Sold
Units
Sold
80
$ 31,600
160
55,760
0
0
62,500 $500.00
105
52,500
44,100 $490.00
75
36,750
0
0
69,700 $348.50
21,100
11,900
$ 115,200 $ 248,800
$ 176,610
A. $34,600. Materials applied to production in May + indirect materials.
($32,100 + $2,500)
B. $5,500. From table above and problem.
C. $32,100. From table above.
D. $96,000. From table above.
E. $115,200. ($96,000 × 1.2) and from table above.
F. $215,800. ($39,500 + $69,700 + $62,500 + $44,100)
G. $176,610. From table above.
H. $14,000. Wages incurred less direct labor applied to production in May.
($110,000 – $96,000)
2.
May 31 balances:
Materials
Work in Process
Finished Goods
Factory Overhead
($9,000 + $40,000 – $34,600)
[$21,100 (Job 0523) + $11,900 (Job 0526)]
($215,800 – $176,610)
underapplied ($–3,000 + $14,000 + $2,500
+ $102,900 – $115,200)
* or ($5,500 + $32,100 + $96,000 + $115,200 – $215,800)
**
Units in
Job No.
Job 0521
Job 0522
Job 0524
Job 0525
Total
$14,400
$33,000*
$39,190**
$1,200
Inventory
20
40
20
15
UnitTotal
Cost
$395.00
348.50
500.00
490.00
Cost
$ 7,900
13,940
10,000
7,350
$39,190