I. Cost Classifications: Fleet Company manufactures shoes. Label each item as to the type of cost: DM, DL, MO or P (direct material, direct labor, mfg overhead or period cost)
_____1. Cost of wages of workers who assemble the shoes.
_____2. Depreciation on the factory in which the shoes are built.
_____3. The cost of leather used in the shoes.
_____4. Wages of the cleanup crew at the factory.
_____5. Research costs for a new type of shoe under development.
_____6. Depreciation on the sewing machines in the factory.
_____7. Indirect materials such as shoe polish, used to condition the leather.
_____8. Factory supervisor's salary.
_____9. Salary of the night watchman at the factory.
____10. Depreciation on the robotic machine used to build the shoe boxes.
11. Direct Materials cost is debited to: a. Raw Materials Inventory b. Manufacturing Overhead c. Cost of Goods Sold d. Direct Materials e. Work in Process
12. Beginning Finished Goods Inventory + X - Ending Finished Goods Inventory = Cost of Goods Sold. What is X? a. Direct Materials b. Manufacturing Overhead c. Cost of Goods Manufactured d. Beginning Work in Process Inventory
13. One way to calculate the Predetermined Overhead Rate is: a. estimated MO divided by estimated Direct Labor Cost b. actual MO divided by actual Direct Labor cost c. actual Direct Labor cost divided by actual MO d. actual MO divided by applied MO
14. Depreciation on the salesman's automobile would be debited to: a. depreciation expense b. manufacturing overhead c. indirect labor cost d. finished goods inventory
15. What criterion must be satisfied for inventory costs to move from Work in Process to Finished Goods Inventory? A. the goods get sold B. the manufacturing overhead is applied C. the goods get finished D. the goods get damaged
16. What criterion must be satisfied for inventory costs to move from Finished Goods to Cost of Goods Sold? A. the goods get sold B. the manufacturing overhead is applied C. the goods get finished D. a requisition is approved
II. Cost Computations. Here are some costs incurred at Williams Manufacturing Company.
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Item
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Beginning of Year
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End of Year
|
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Raw Materials Inventory
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$15,000
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$25,000
|
|
Work in Process Inventory
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$40,000
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$31,000
|
|
Finished Goods Inventory
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$10,000
|
$25,000
|
|
During the Year
|
|
|
Purchases of Raw Material
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$82,000
|
|
|
Direct Labor Costs
|
$95,000
|
|
|
Manufacturing Overhead
|
$50,000
|
|
Answer............................................Calculations
$__________1. Direct Materials Used ________________________________
$__________2. Total Manufacturing Costs Incurred ____________________________
$__________3. Total Manufacturing Cost__________________
$__________4. Cost of Goods Manufactured___________________________
$__________5. Cost of Goods Sold___________________________________
III. Journal Entries. Make the appropriate journal entries for these transactions.
DR CR
1. Raw materials were purchased on account, $40,000.
2. Actual MO costs were $80,000 on account.
3. A total of $60,000 of raw materials were moved to the factory, $50,000 direct, $10,000 indirect.
4. Direct Labor costs were $50,000 direct; indirect labor was $7,000.
5. MO is applied at the rate of 80% of direct labor cost.
6. Goods costing $45,000 were completed.
7. Sales were $55,000 on account; and COGS was $40,000.
IV. Process Costing Problem
Stein Industries manufactures outdoor chairs in its Plant #2. Stein began July with 500 units in Beginning Work in Process. A total of 18,000 units were started into production. Ending WIP was 500 units that were 80% complete. July Cost Data:
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Work in Process July 1
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$15000
|
|
Materials
|
288,000
|
|
Labor
|
133900
|
|
Manufacturing Overhead
|
96,700
|
|
Total
|
$533,600
|
|
Units Table
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Whole Units
|
|
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Beginning WIP
|
|
|
|
Units Started
|
|
|
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Units to Acct For
|
|
Equivalent Units
|
|
|
|
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Units Transferred
|
|
|
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Ending WIP
|
|
|
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Units Acct'd For
|
|
|
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Total Costs
|
$
|
|
Equivalent Units
|
EU
|
|
Cost Per Unit
|
$
|
|
Cost of Units Compl/Transferred:
|
$
|
|
Cost of Ending WIP:
|
$
|
|
Total Costs
|
$
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Problem -At the end of the year, Johnson Manufacturing ended up with a debit balance of $900 in the Manufacturing Overhead account.
1. Was the MO overapplied or underapplied?
2. Show the entry to close the MO account at the end of the year.
3. Why is the applied Manufacturing Overhead an estimate rather than an actual amount?