Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 3, Problem 46P
Finlon Upholstery, Inc. uses a
Finlon applies manufacturing
Job no. 2077 was completed in January 20x2; there was no work in process at year-end. All jobs produced during 20x2 were sold with the exception of job no. 2143, which contained direct-material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold.
Required:
- 1. Determine the company’s predetermined overhead application rate.
- 2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
- 3. Compute the amount that the company would disclose as finished-goods inventory on the December 31, 20x2, balance sheet.
- 4. Prepare the
journal entry needed to record the year’s completed production. - 5. Compute the amount of under- or overapplied overhead at year-end, and prepare the necessary journal entry to record its disposition.
- 6. Determine the company’s 20x2 cost of goods sold.
- 7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.
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Finlon Upholstery Inc. uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 2001, consisted of one job (no. 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.
Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours multiplied by the budgeted direct-labor rate.) Budgeted totals for 2002 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year are as follows:
Actual Results
Direct Materials Used
$5,600,000.00
Direct Labor
$4,350,000.00
Indirect Material Used
$65,000.00
Indirect Labor
$2,860,000.00
Factory Depreciation
$1,740,000.00
Factory Insurance
$59,000.00
Factory Utilities
$830,000.00
Selling and Administrative Expenses
$2,160,000.00
Total…
[The following information applies to the questions displayed below.]
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were
as follows:
Raw materials
Work in process
Finished goods
The company applies overhead cost to jobs using direct labor-hours. For this year, the company's predetermined
overhead rate of $12.50 per direct labor-hour was based on a cost formula that estimated $500,000 of total
manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were
recorded this year:
$ 84,500
$ 35,000
$ 44,100
a. Raw materials were purchased on account, $614,000.
b. Raw materials used in production, $567,600. All of of the raw materials were used as direct materials.
c. The following costs were accrued for employee services: direct labor, $450,000; indirect labor, $150,000; selling and
administrative salaries, $290,000.
d. Incurred various selling and administrative expenses…
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were
as follows:
Raw materials
Work in process
Finished goods
The company applies overhead cost to jobs using direct labor-hours. For this year, the company's predetermined
overhead rate of $12.50 per direct labor-hour was based on a cost formula that estimated $500,000 of total
manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were
recorded this year:
a. Raw materials were purchased on account, $614,000.
b. Raw materials used in production, $567,600. All of of the raw materials were used as direct materials.
c. The following costs were accrued for employee services: direct labor, $450,000; indirect labor, $150,000; selling and
administrative salaries, $290,000.
$ 84,500
$ 35,000
$ 44,100
d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods…
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 - Prob. 31ECh. 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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