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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Chapter 3, Problem 61C
CompuFurn, Inc. manufactures furniture for computer work stations. CompuFurn uses a
On November 30, the company’s finished-goods inventory, which is evaluated using the first-in, first-out (FIFO) method, consisted of four items.
At the end of November, the balance in CompuFurn’s Materials Inventory account, which includes both raw materials and purchased parts, was $668,000. Additions to and requisitions from the materials inventory during the month of December included the following.
CompuFurn applies manufacturing
During the month of December, machine hours and labor hours consisted of the following:
The jobs completed in December and the unit sales for that month are as follows:
Required:
- 1. Describe when it is appropriate for a company to use a job-order costing system.
- 2. Calculate the balance in CompuFurn, Inc.’s Work-in-Process Inventory account as of December 31.
- 3. Calculate the cost of the chairs in CompuFurn, Inc.’s finished-goods Inventory as of December 31.
- 4. Actual manufacturing overhead incurred in December amounted to $252,000. Calculate Compu-Furn’s over applied or under applied overhead for the year.
- 5. Explain two alternative accounting treatments for over applied or under applied overhead balances when using a job-order costing system.
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Lamonda Corp. uses a job order cost system. On April 1, the accounts had balances as shown in the T-accounts below:The following transactions occurred during April:(a) Purchased materials on account at a cost of $233,570.(b) Requisitioned materials at a cost of $111,500, of which $16,100 was for general factory use.(c) Recorded factory labor of $225,600, of which $41,975 was indirect.(d) Incurred other costs:
Selling expense
$
35,100
Factory utilities
23,100
Administrative expenses
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11,800
Factory depreciation
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(e) Applied overhead at a rate equal to 143 percent of direct labor cost.(f) Completed jobs costing $262,450.(g) Sold jobs costing $323,070.(h) Recorded sales revenue of $504,000.
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:
The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:
a. Raw materials were purchased on account, $510,000.
b. Raw materials used in production, $480,000. All of of the raw materials were used as direct materials.
c. The following costs were accrued for employee services: direct labor, $600,000; indirect labor, $150,000; selling and administrative salaries, $240,000.
d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $367,000.
e. Incurred various manufacturing…
Lamonda Corp. uses a job order cost system. On April 1, the accounts had balances as shown
in the T - accounts below: The following transactions occurred during April: (a) Purchased
materials on account at a cost of $233,270. (b) Requisitioned materials at a cost of S
111,500, of which $16, 500 was for general factory use. (c) Recorded factory labor of $
224,900, of which $42, 675 was indirect. (d) Incurred other costs: Selling expense $ 35,900
Factory utilities 23, 600 Administrative expenses 51,350 Factory rent 11, 200 Factory
depreciation 19, 100 (e) Applied overhead at a rate equal to 129 percent of direct labor cost.
Completed jobs costing $262, 750. (g) Sold jobs costing $324,170. (h) Recorded sales
revenue of $506, 000. Required: 1. & 2. Post the April transactions to the T-accounts and
compute the balance in the accounts at the end of April. (Post each transaction (d) cost
separately. Round your answers to 2 decimal places.) 3 - a. Compute over- or underapplied
manufacturing…
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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