Morrison Company uses job-order costing to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows: Morrison Company Balance Sheet January 1 Assets Cash Raw materials Work in process Finished goods Prepaid expenses Property, plant, and equipment (net) Total assets $ 11,900 5,900 20,550 $ 34,800 38,350 2,750 137,000 $ 212,900 Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity During January the company completed the following transactions: a. Purchased raw materials on account, $90,800. b. Raw materials used in production, $93,600 ($78,600 was direct materials and $15,000 was indirect materials). c. Paid $195,100 of salaries and wages in cash ($110,200 was direct labor, $35,100 was indirect labor, and $49,800 was related to employees responsible for selling and administration). d. Various manufacturing overhead costs incurred (on account) to support production, $41,550. $ 10,400 202,500 $ 212,900 e. Depreciation recorded on property, plant, and equipment, $68,800 (70% related to manufacturing equipment and 30% related to assets that support selling and administration). f. Various selling expenses paid in cash, $39,800. g. Prepaid insurance expired, $1,700 (80% related to production, and 20% related to selling and administration). h. Manufacturing overhead applied to production, $141,000. i. Cost of goods manufactured, $293,800. j. Cash sales to customers, $401,720. k. Cost of goods sold (unadjusted), $289,800. 1. Cash payments to creditors, $77,200. m. Underapplied or overapplied overhead $?.
Morrison Company uses job-order costing to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows: Morrison Company Balance Sheet January 1 Assets Cash Raw materials Work in process Finished goods Prepaid expenses Property, plant, and equipment (net) Total assets $ 11,900 5,900 20,550 $ 34,800 38,350 2,750 137,000 $ 212,900 Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity During January the company completed the following transactions: a. Purchased raw materials on account, $90,800. b. Raw materials used in production, $93,600 ($78,600 was direct materials and $15,000 was indirect materials). c. Paid $195,100 of salaries and wages in cash ($110,200 was direct labor, $35,100 was indirect labor, and $49,800 was related to employees responsible for selling and administration). d. Various manufacturing overhead costs incurred (on account) to support production, $41,550. $ 10,400 202,500 $ 212,900 e. Depreciation recorded on property, plant, and equipment, $68,800 (70% related to manufacturing equipment and 30% related to assets that support selling and administration). f. Various selling expenses paid in cash, $39,800. g. Prepaid insurance expired, $1,700 (80% related to production, and 20% related to selling and administration). h. Manufacturing overhead applied to production, $141,000. i. Cost of goods manufactured, $293,800. j. Cash sales to customers, $401,720. k. Cost of goods sold (unadjusted), $289,800. 1. Cash payments to creditors, $77,200. m. Underapplied or overapplied overhead $?.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Morrison Company uses job-order costing to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:
Morrison Company
Balance Sheet
January 1
Assets
Cash
Raw materials
Work in process
Finished goods
Prepaid expenses
Property, plant, and equipment (net)
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Retained earnings
Total liabilities and stockholders' equity
$ 11,900
5,900
20,550
i. Cost of goods manufactured, $293,800.
j. Cash sales to customers, $401,720.
$ 34,800
k. Cost of goods sold (unadjusted), $289,800.
1. Cash payments to creditors, $77,200.
m. Underapplied or overapplied overhead_$?.
38,350
2,750
137,000
$ 212,900
During January the company completed the following transactions:
a. Purchased raw materials on account, $90,800.
b. Raw materials used in production, $93,600 ($78,600 was direct materials and $15,000 was indirect materials).
c. Paid $195,100 of salaries and wages in cash ($110,200 was direct labor, $35,100 was indirect labor, and $49,800 was related to
employees responsible for selling and administration).
d. Various manufacturing overhead costs incurred (on account) to support production, $41,550.
e. Depreciation recorded on property, plant, and equipment, $68,800 (70% related to manufacturing equipment and 30% related to
assets that support selling and administration).
f. Various selling expenses paid in cash, $39,800.
$ 10,400
202,500
$ 212,900
g. Prepaid insurance expired, $1,700 (80% related to production, and 20% related to selling and administration).
h. Manufacturing overhead applied to production, $141,000.
Transcribed Image Text:Calculate the ending balances on the company's balance sheet on January 31st. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for
balance sheet.)
Note: Amounts to be deducted should be indicated by a minus sign.
Transactions
(a)
(b)
(c)
(d)
(e)
(f)
(9)
(h)
(1)
(1)
(k)
(1)
(m)
Beginning balances at 1/1
Raw material purchases
Raw materials used in production
Salaries and wages
Various overhead costs
Depreciation
Various selling expenses
Expiration of prepaid insurance
Manufacturing overhead applied
Cost of goods manufactured
Sales
Cost of goods sold
Payments to creditors
Underapplied overhead
Ending balances at 1/31
Cash
$ 34,800
(195,100)
(39,800)✔
401,720✔✔
(77,200) ✔
Raw
Materials
$ 11,900
Morrison Company
Transaction Analysis
For the Month Ended Jaunary 31
Work in
Process
$ 5,900
90,800✔
(93,600) ✔
78,600✔
110,200✔
Finished Manufacturing
Goods
Overhead
$ 20,550
141,000✔
(293,800) ✔ 293,800✔
(289,800)✔
$
✓
$ 124,420 $ 9,100 $ 41,900 $ 24,550 $
0
+
› › ››
15,000✔
35,100
41,550
48,160
1,360✔
(141,000)✔
(170) ✔
0
Prepaid
Expenses
$ 2,750
$
(1,700) ✔
$
PPE
(net)
137,000
=
1,050 $68,200✔
E
=
=
=
(68,800) =
=
=
=
=
=
=
=
E
Accounts
Payable
$ 10,400
90,800✔
41,550
Retained
Earnings
$ 202,500
(49,800) X
(20,640)
(39,800)
(340)
300
00
401,720✔
(289,800)
(77,200) X
(170)
$ 65,550 $ 203,670✔
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