Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 34E
The following information pertains to Trenton Glass Works for the year just ended.
Required:
- 1. Compute the firm’s predetermined
overhead rate, which is based on direct-labor hours. - 2. Calculate the overapplied or underapplied overhead for the year.
- 3. Prepare a
journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold. - 4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (2) above. Show how the solution will change if the following data change: budgeted manufacturing overhead was $990,000, property taxes were $25,000, and purchases of indirect material amounted to $97,000.
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Students have asked these similar questions
Required:
1. Prepare journal entries to record the transactions given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account.
Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35,000.
b.
Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in
each account, assuming that Work in Process has a beginning balance of $35,000.
Manufacturing Overhead
C.
Beginning balance
d.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
e.
Debit
Ending balance
✓
✓
✓
38,200✔
22,000✔
106,000 ✓
130,000✔
X Answer is not complete.
Credit
380,000 X
83,800
Beginning balance
b.
C.
f.
Debit
Ending balance
Credit
512,000 X
Sabre Corporation is a manufacturing outfit that uses job-order costing. The beginning inventory
balances for direct materials, work-in-process inventory, and finished goods inventory was $20,000,
$15,000, and $30,000 respectively.
The company applies overhead cost to jobs based on machine-hours worked. For the current year, the
company estimated that it would work 75,000 machine-hours and incur $450,000 in manufacturing
overhead cost. The following transactions were recorded during the year:
1.
2.
3.
4.
4567
5.
8.
9.
10.
11.
Raw materials were purchased on account: $410,000.
Raw materials were requisitioned for use in production: $380,000 ($360,000 direct materials
and $20,000 indirect materials)
The following costs were incurred for employee services: direct labour, $75,000; indirect
labour, $110,000; sales commissions, $90,000; and administrative salaries, $200,000.
Sales travel costs were incurred: $17,000.
Utility costs were incurred in the factory: $43,000.
Advertising costs were…
1
Kim's Asphalt does driveway and parking lot resurfacing work for large commercial clients as well as small residential clients. An
inventory of materials and equipment is on hand at all times so that work can start as quickly as possible. Special equipment is ordered
as required. On May 1, the Materials and Equipment Inventory account had a balance of $44.000. The Work-in-Process Inventory
account is maintained to record costs of work not yet complete. There were two such jobs on May 1 with the following costs.
Job 27
Job 33
Highlands Mal1
$16,575
14,300
4,290
Pine Ridge Estates
$ 53,300
26,658
7,995
Materials and equipment
Direct labor
Overhead (applied)
Overhead has been applied at 30 percent of the costs of direct labor.
During May, Kim's Asphalt started two new jobs. Additional work was carried out on Jobs 27 and 33. with the latter completed and
billed to Pine Ridge Estates. Details on the costs incurred on jobs during May follow.
Job
Materials and equipment
Direct labor (wages…
Chapter 3 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 3 - List and explain four purposes of product costing.Ch. 3 - Explain the difference between job-order and...Ch. 3 - How is the concept of product costing applied in...Ch. 3 - What are the purposes of the following documents:...Ch. 3 - Why is manufacturing overhead applied to products...Ch. 3 - Explain the benefits of using a predetermined...Ch. 3 - Describe one advantage and one disadvantage of...Ch. 3 - Describe an important cost-benefit issue involving...Ch. 3 - Explain the difference between actual and normal...Ch. 3 - When a single, volume-based cost driver (or...
Ch. 3 - Prob. 11RQCh. 3 - Describe the process of two-stage cost allocation...Ch. 3 - Define each of the following terms, and explain...Ch. 3 - Describe how job-order costing concepts are used...Ch. 3 - What is meant by the term cost driver? What is a...Ch. 3 - Describe the flow of costs through a...Ch. 3 - Give an example of how a hospital, such as the...Ch. 3 - Why are some manufacturing firms switching from...Ch. 3 - What is the cause of over applied or under applied...Ch. 3 - Briefly describe two ways of closing out over...Ch. 3 - Describe how a large retailer such as Lowes would...Ch. 3 - Prob. 22RQCh. 3 - For each of the following companies, indicate...Ch. 3 - The controller for Tender Bird Poultry, Inc....Ch. 3 - Finley Educational Products started and finished...Ch. 3 - Bodin Company manufactures finger splints for kids...Ch. 3 - McAllister, Inc. employs a normal costing system....Ch. 3 - Garrett Toy Company incurred the following costs...Ch. 3 - Crunchem Cereal Company incurred the following...Ch. 3 - Reimel Furniture Company, Inc. incurred the...Ch. 3 - Selected data concerning the past years operations...Ch. 3 - Sweet Tooth Confectionary incurred 157,000 of...Ch. 3 - The following information pertains to Trenton...Ch. 3 - The following data pertain to the Oneida...Ch. 3 - Refer to the data for the preceding exercise for...Ch. 3 - Design Arts Associates is an interior decorating...Ch. 3 - Suppose you are the controller for a company that...Ch. 3 - Laramie Leatherworks, which manufactures saddles...Ch. 3 - Refer to Exhibit 312, which portrays the three...Ch. 3 - Refer to the illustration of overhead application...Ch. 3 - The following data refer to Twisto Pretzel Company...Ch. 3 - Burlington Clock Works manufactures fine,...Ch. 3 - Perfecto Pizza Company produces microwavable...Ch. 3 - Stellar Sound, Inc. which uses a job-order costing...Ch. 3 - Finlon Upholstery, Inc. uses a job-order costing...Ch. 3 - JLR Enterprises provides consulting services...Ch. 3 - Garcia, Inc. uses a job-order costing system for...Ch. 3 - MarineCo, Inc. manufactures outboard motors and an...Ch. 3 - The following data refers to Huron Corporation for...Ch. 3 - Refer to the schedule of cost of goods...Ch. 3 - Marco Polo Map Companys cost of goods sold for...Ch. 3 - Midnight Sun Apparel Company uses normal costing,...Ch. 3 - Marc Jackson has recently been hired as a cost...Ch. 3 - Troy Electronics Company calculates its...Ch. 3 - Tiana Shar, the controller for Bondi Furniture...Ch. 3 - Scholastic Brass Corporation manufactures brass...Ch. 3 - Refer to the preceding problem regarding...Ch. 3 - Prob. 59PCh. 3 - TeleTech Corporation manufactures two different...Ch. 3 - CompuFurn, Inc. manufactures furniture for...Ch. 3 - FiberCom, Inc., a manufacturer of fiber optic...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Dream House Builders, Inc. applies overhead by linking it to direct labor. At the start of the current period, management predicts total direct labor costs of $100,000 and total overhead costs of $20,000. On January 31, the direct labor for this job equals $2,700. Complete the following journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.arrow_forwardSandar Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Computer-hours Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour 90,000 $1,278,000 $5.30 During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year ended 31 December 2019: Computer-hours 85,000 Purchase of raw materials $7,890,000 Direct labor cost $1,722,000 Manufacturing overhead costs: Insurance, factory ... $ 88,000 Depreciation of equipment 170,000 Indirect material . Indirect labor . 12,000 327,000 Property taxes 85,000 Maintenance. 630,000 Rent, building…arrow_forwardUse the space provided below to prepare six summary journal entries for the month of August. These entries record (1) cost of direct materials used, (2) cost of direct labor, (3) cost of applied overhead, (4) cost of jobs completed, (5) cost of goods sold, and (6) total sales on account. Then set up T-accounts for Work in Process, Finished Goods, Cost of Goods Sold, and Sales. Post the entries to the appropriate accounts and then balance each account. Finally, prepare a supporting schedule by job number showing the cost of ending work in process, finished goods, and cost of goods sold.arrow_forward
- Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.arrow_forwardPlease use the information from this problem for these calculations. After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: It estimates there will be five orders in the next year, and those jobs will involve: What is the total cost of the jobs?arrow_forwardPlease use the information from this problem for these calculations. After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: Box Springs estimates there will be four orders in the next year, and those jobs will involve: What is the total cost of the jobs?arrow_forward
- Spokane Production Co. obtained the following information from its records for July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for July: a. The gross profit or loss for each job completed and sold, and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)arrow_forwardGerken Fabrication Inc. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of March: a. Compute the total production cost of each job. b. Prepare the journal entries to charge the costs of materials, labor, and factory overhead to Work in Process. c. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. d. Compute the unit cost of each job. e. Compute the selling price per unit for each job, assuming a mark-on percentage of 50%.arrow_forwardThe cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be 3,150,000, and total direct labor costs would be 1,800,000. During February, the actual direct labor cost totalled 160,000, and factory overhead cost incurred totaled 283,900. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for February. c. What is the February 28 balance of the account Factory OverheadBlending Department? d. Does the balance in part (c) represent over- or underapplied factory overhead?arrow_forward
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