Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 4ATC
To determine
Write a memorandum responding to the Company President’s suggestion
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RampUp Storage Containers produces a 1,000-cubic-foot metal storage unit that is used by storage
companies and other businesses needing low-cost, mobile storage units. The units sell for $3,000
per unit.
The company uses a standard costing system. At the start of 2016, standard costs were set
as follows:
Standard cost per unit:
$1,200
Material cost (6 prefabricated metal sheets × $200)
Direct labor (10 hours × $20)
200
Overhead ($500 per unit)
500
Total
$1,900
The overhead rate was calculated as follows: At the start of 2016, the company estimated that it
would produce and sell 5,000 units and incur $500,000 of variable overhead costs and $2,000,000
of fixed overhead costs:
Variable overhead
Fixed overhead
$ 500,000
2,000,000
2,500,000
5,000
Total
Divided by estimated production
Overhead cost per unit
$
500
Based on estimated sales, standard costs, and other information, the following budget was pre-
pared:
2016 Budget (Expected Production and Sales of 5,000 Units)
Sales
$15,000,000…
Recording manufacturing costs in a JIT costing system
Lally, Inc. produces universal remote controls. Lally uses a JIT costing system. One of the Company’s products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2018 Lally produced 500 units and sold 495 units on account at $45 each. It purchased $4,800 of direct materials on the account and incurred actual conversion costs totaling $14,000.
Requirements
Prepare summary journal entries for January.
January 1, 2018, the balance of the Raw and In-Process Inventory account was $70. Use a T-account to find the January 31 balance.
Use a T-account to determine whether conversion costs are over-allocated or under-allocated for the month. By how much? Prepare the journal entry to adjust the Conversion Costs account.
Lally, Inc. produces universal remote controls. Lally uses a JIT costing system. One of the company's products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2018, Lally produced 500 units and sold 495 units on account at $45 each. It purchased $4,800 of direct materials on the account and incurred actual conversion costs totaling $14,000.
Requiremets :
1. Prepare summary jounal entries for January.
2. The January 1, 2018, balance of the Raw and In-Process inventory account was $70. Use a T - account to find the January 31 balance.
3. Use a T - account to determine wheither conversion costs are overallocated or unerallocated for the month. By how much? Prepare the journal entry to adjust the Conversion Costs account.
Chapter 12 Solutions
Survey Of Accounting
Ch. 12 - 1.What is a cost object? Identify four different...Ch. 12 - Prob. 2QCh. 12 - 3.If the cost object is a manufactured product,...Ch. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - 10.Why are some manufacturing costs not directly...
Ch. 12 - Prob. 11QCh. 12 - 12.On January 31, the managers of Integra, Inc....Ch. 12 - 13.Respond to the following statement: The...Ch. 12 - Prob. 14QCh. 12 - Define the term cost pool. How are cost pools...Ch. 12 - LO 4-1Exercise 4-1A Direct versus indirect costs...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Exercise 4-4APooling overhead cost Ware...Ch. 12 - Prob. 5ECh. 12 - Exercise 4-5A Allocating overhead cost among...Ch. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Exercise 4-6AAllocating overhead costs among...Ch. 12 - Exercise 4-9AAllocating to solve a timing problem...Ch. 12 - Prob. 11ECh. 12 - Exercise 4-11AHow the allocation of fixed cost...Ch. 12 - Prob. 13ECh. 12 - Problem 4-17A Cost accumulation and allocation...Ch. 12 - Problem 4-18A Selecting an appropriate cost driver...Ch. 12 - Problem 4-19A Cost allocation in a service...Ch. 12 - Prob. 17PCh. 12 - Problem 4-21A Allocation to accomplish smoothing...Ch. 12 - Problem 4-22A Allocating indirect costs between...Ch. 12 - Prob. 20PCh. 12 - Prob. 1ATCCh. 12 - Prob. 2ATCCh. 12 - ATC 4-3 Research Assignment Using real-world data...Ch. 12 - Prob. 4ATCCh. 12 - Prob. 5ATC
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