FINANCIAL ACCOUNTING (LOOSELEAF)
FINANCIAL ACCOUNTING (LOOSELEAF)
18th Edition
ISBN: 9781260706239
Author: williams
Publisher: MCG
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Question
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Chapter 17, Problem 4BP

a.

To determine

Calculate the overhead rate that should be used for each department in applying overhead costs to job no. 399.

a.

Expert Solution
Check Mark

Explanation of Solution

Calculate overhead rate for department A.

Overhead application rate =Manufacturing overheadMachine hours=$810,00016,200=$50per machine hour

Calculate overhead rate for department B.

Overhead application rate =Manufacturing overheadDirect labor hours=$620,00024,800=$25per direct labor hour

b.

To determine

Calculate the total cost of job no.652, and calculate the unit cost of the product manufactured on this production order.

b.

Expert Solution
Check Mark

Explanation of Solution

Calculate the total cost of job no.652, and calculate the unit cost of the product manufactured on this production order as shown below:

Job No. 652
ParticularsDepartment A (1)Department B (2)Total (1+2)
 Direct materials$19,000$1,750$20,750
 Direct labor$1,500$750$2,250
 Manufacturing overhead
$9,000$1,000$10,000
 Total cost of job no. 399$33,000
 Unit cost$33

Table (1)

Working notes:

Calculate manufacturing overhead amount for Department A.

Manufacturing overhead =Machine hours×Overhead rate=180hours×$50per hour=$9,000 (1)

Calculate manufacturing overhead amount for department B.

Manufacturing overhead=Direct labor hours×Overhead rate=40direct labor hours×$25per hour=$1,000 (2)

Calculate unit cost.

Unit cost=Total cost of Job no.399Number of units=$33,0001,000units=$33cost per unit (3)

c.

To determine

Prepare journal entry to record sale on account.

c.

Expert Solution
Check Mark

Explanation of Solution

Prepare journal entry to record sale on account of 1,000 circuit boards.

Account titles and ExplanationDebitCredit
Accounts receivable$50,000
     Sales$50,000
(To record credit sales in march)

Table (2)

  • Accounts receivable is a current asset, and it is increased. Therefore, debit accounts receivable account for $50,000.
  • Sales is a component of stockholders’ equity, and it is increased. Therefore, credit sales account for $50,000.

Prepare journal entry to record cost of goods sold.

Account titles and ExplanationDebitCredit
Cost of goods sold$33,000
     Finished goods inventory$33,000
(To record cost of units sold during march)

Table (3)

Working note:

Calculate cost of goods sold.

Cost of goods sold=sold units ×unit cost=1,000units ×$33=$33,000 (4)

  • Cost of goods sold is a component of stockholders’ equity, and it is decreased. Therefore, debit cost of goods sold account for $33,000.
  • Finished goods inventory is a current asset, and it is decreased. Therefore, credit finished goods inventory account for $33,000.

d.

To determine

Calculate over-under applied overhead in each department during the year.

d.

Expert Solution
Check Mark

Explanation of Solution

Calculate over-under applied overhead in department A.

Overapplied overhead=Applied overheadActual overhead =(16,500 direct labor hours×$50per hour)$800,000=$825,000$800,000=$25,000

Calculate over-under applied overhead in department B.

Underapplied overhead=Actual overhead Applied overhead=$615,000(24,000 machine hours×$25per hour)=$615,000$600,000=$15,000

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Chapter 17 Solutions

FINANCIAL ACCOUNTING (LOOSELEAF)

Ch. 17 - 4. What is meant by the term overhead application...Ch. 17 - 5. What is meant by the term overhead cost driver?...Ch. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - 8. Taylor & Malone is a law firm. Would the...Ch. 17 - 9. Define the term activity base. Ch. 17 - 10. Define the term cost driver. Ch. 17 - 11. Why is the use of a single activity base...Ch. 17 - 12. Describe how activity-based costing can...Ch. 17 - Prob. 13DQCh. 17 - 14. Why is the use of direct labor hours as an...Ch. 17 - 15. Discuss the potential benefits associated with...Ch. 17 - BRIEF EXERCISE 17.1 Accounting for Overhead Taylor...Ch. 17 - BRIEF EXERCISE 17.2 Transferring Costs in a Job...Ch. 17 - BRIEF EXERCISE 17.3 Overhead Application...Ch. 17 - BRIEF EXERCISE 17.4 Actual Overhead versus Applied...Ch. 17 - BRIEF EXERCISE 17.5 Types of Cost Accounting...Ch. 17 - BRIEF EXERCISE 17.6 Applying Direct Labor...Ch. 17 - BRIEF EXERCISE 17.7 Applying Direct Materials...Ch. 17 - Prob. 8BECh. 17 - BRIEF EXERCISE 17.9 Selecting Activity...Ch. 17 - Prob. 10BECh. 17 - EXERCISE 17.1 Accounting Terminology Listed are...Ch. 17 - EXERCISE 17.2 Flow of Costs in Job Order...Ch. 17 - EXERCISE 17.3 Journal Entries in Job Order...Ch. 17 - EXERCISE 17.4 Overhead Cost Drivers; Determination...Ch. 17 - EXERCISE 17.5 Cost Classifications Identify...Ch. 17 - Prob. 6ECh. 17 - EXERCISE 17.7 Journal Entries, Cost Flows, and...Ch. 17 - EXERCISE 17.8 Journal Entries, Cost Flows, and...Ch. 17 - EXERCISE 17.9 Journal Entries, Cost Flows, and...Ch. 17 - Prob. 10ECh. 17 - EXERCISE 17.11 Solving for Missing Amounts in a...Ch. 17 - EXERCISE 17.12 Solving for Missing Amounts in a...Ch. 17 - EXERCISE 17.13 Determining Balance Sheet Amounts...Ch. 17 - EXERCISE 17.14 Allocating Activity Cost...Ch. 17 - EXERCISE 17.15 Using ABC to Determine a Bid...Ch. 17 - PROBLEM 17.1A Job Order Costing: Computations and...Ch. 17 - PROBLEM 17.2A Job Order Costing: Journal Entries...Ch. 17 - PROBLEM 17.3A Job Order Costing: A Comprehensive...Ch. 17 - Prob. 4APCh. 17 - PROBLEM 17.5A Poor Drivers Are Cost Drivers Ye...Ch. 17 - PROBLEM 17.6A Applying Overhead Costs Using...Ch. 17 - Prob. 7APCh. 17 - PROBLEM 17.8A ABC versus Use of a Single Activity...Ch. 17 - PROBLEM 17.1B Job Order Costing: Computations and...Ch. 17 - PROBLEM 17.2B Job Order Costing: Journal Entries...Ch. 17 - PROBLEM 17.3B Job Order Costing: A Comprehensive...Ch. 17 - Prob. 4BPCh. 17 - PROBLEM 17.5B Drivers for Drivers Big Boomers...Ch. 17 - PROBLEM 17.6B Applying Overhead Costs Using...Ch. 17 - Prob. 7BPCh. 17 - PROBLEM 17.8B ABC versus Use of a Single Activity...Ch. 17 - CASE 17.1 Classic Cabinets has one factory in...Ch. 17 - CASE 17.2 Implementing ABC Dave Miller is the...Ch. 17 - CASE 17.3 The Bidding Wars Kendahl Plastics...
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