Concept explainers
(a)
Introduction:
In cost accounting, various production stages of manufacturing a product are identified. Thus, manufacturing costs are recorded at such production processes to reflect appropriate apportionment of costs.
To record:
The transactions in T-shape accounts.
Explanation of Solution
Raw Materials Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(a) Purchases | 20,000 | (b) Materials issued (job 201) | 12,000 |
(b) Materials issued (job 201) | 21,000 | ||
(b) Indirect materials | 3,200 |
Work in process Inventory
Particulars | $ (Debit) | Particulars | $ (Credit) |
(b) Materials issued (job 201) | 12,000 | ||
(b) Materials issued (job 202) | 21,000 | ||
(c) Direct labor (job 201) | 2,150 | ||
(c) Direct labor (job 202) | 10,750 | ||
(d) Applied overhead (600×$25) | 15,000 |
Finished Goods Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Completed and transferred (job 201) | 16,650 |
Manufacturing Overhead:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(b) Indirect materials | 3,200 | (d) Applied overhead (600×$25) | 15,000 |
(c) Factory supervision | 5,000 |
Sales Revenue:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(i) Sales (job 200) | 31,000 |
(b)
Introduction:
Manufacturing Costs:
In cost accounting, various production stages of manufacturing a product are identified. Thus, manufacturing costs are recorded at such production processes to reflect appropriate apportionment of costs.
To prepare:
The T-accounts and calculate their ending balances.
Explanation of Solution
Raw Materials Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Opening Balance | 32,000 | (b) Materials issued (job 201) | 12,000 |
(a) Purchases | 20,000 | (b) Materials issued (job 202) | 21,000 |
(b) Indirect materials | 3,200 | ||
Closing Balance | 15,800 | ||
52,000 | 52,000 | ||
Opening Balance | 15,800 |
Work in process Inventory
Particulars | $ (Debit) | Particulars | $ (Credit) |
Opening Balance | 15,500 | (f) Completed and transferred to finished goods (Job 201) | 16,650 |
(b) Materials issued (job 201) | 12,000 | Closing Balance | 59,750 |
(b) Materials issued (job 202) | 21,000 | ||
(c) Direct labor (job 201) | 2,150 | ||
(c) Direct labor (job 202) | 10,750 | ||
(d) Applied overhead (100×$25) | 2,500 | ||
(d) Applied overhead (500×$25) | 12,500 | ||
76,400 | 76,400 | ||
Opening Balance | 59,750 |
Finished Goods Inventory:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Opening Balance | 20,000 | Closing Balance | 34,150 |
(f) Completed and transferred (job 201) | 14,150 | ||
34,150 | 34,150 | ||
Opening Balance | 34,150 |
Manufacturing Overhead:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(b) Indirect materials | 3,200 | (d) Applied overhead (600×$25) | 15,000 |
(c) Factory supervision | 5,000 | ||
Closing Balance | 6,800 | ||
15,000 | 15,000 | ||
Over applied | 6,800 |
Cost of Goods Sold:
(As per the question, there are no details available regarding the cost of sale of Job 200. Hence, it has been left unbalanced based on the available information.)
Particulars | $ (Debit) | Particulars | $ (Credit) |
Over applied | 6,800 |
Miscellaneous Accounts:
Particulars | $ (Debit) | Particulars | $ (Credit) |
(e) Factory rent | 3,100 | (e) Factory insurance | 1,250 |
(e) |
2,500 | Closing Balance | 6,100 |
(e) Factory utilities | 1,750 | ||
7,350 | 7,350 | ||
Opening Balance | 6,100 |
Sales Revenue:
Particulars | $ (Debit) | Particulars | $ (Credit) |
Closing Balance | 31,000 | (g) Sales (job 200) | 31,000 |
31,000 | 31,000 | ||
Opening Balance | 31,000 |
(c)
Introduction:
Manufacturing Costs:
In cost accounting, various production stages of manufacturing a product are identified. Thus, manufacturing costs are recorded at such production processes to reflect appropriate apportionment of costs.
To calculate:
The cost of goods manufactured.
Explanation of Solution
Cost of Goods Manufactured (For Job 201 and 202)
(As per the question, the ratio of both the jobs isn’t available to segregate the purchases, use of indirect materials and various other factors. Thus, the question has been solved considering all the values equally for each job.)
Particulars | Job 201 ($) | Job 202 ($) |
Beginning raw material inventory | 32,000 | 32,000 |
(+) Raw material purchases | 10,000 | 10,000 |
(-) Indirect materials | (1,600) | (1,600) |
(-) Ending raw material inventory | (28,400) | (19,400) |
Direct material used | 20,400 | 21,000 |
Direct labor | 2,150 | 10,750 |
Manufacturing overhead applied | 2,500 | 12,500 |
Total current manufacturing costs | 26,650 | 44,750 |
(+) Beginning work in process inventory | 15,500 | 15,500 |
(-) Ending work in process inventory | (16,550) | (44,250) |
Cost of goods manufactured. | 14,000 | 16,000 |
The cost of goods manufactured are shown in the ‘cost of goods sold’ account to calculate the adjusted cost of goods sold and determine the profit, thereof.
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Chapter 2 Solutions
Managerial Accounting
- Channel Products Inc. uses the job order cost system of accounting. The following is a list of the jobs completed during March, showing the charges for materials issued to production and for direct labor. Assume that factory overhead is applied on the basis of direct labor costs and that the predetermined rate is 200%. Required: Compute the amount of overhead to be added to the cost of each job completed during the month. Compute the total cost of each job completed during the month. Compute the total cost of producing all the jobs finished during the month.arrow_forwardLorrimer Company has a job-order cost system. The following debits (credits) appeared in the Work-in-Process account for the month of June. During the month of June, direct labor totaled 30,000 and 24,000 of overhead was applied to production. Finished Goods was debited 100,000 during June. Lorrimer Company applies overhead at a predetermined rate of 80% of direct labor cost. Job number 83, the only job still in process at the end of June, has been charged with manufacturing overhead of 3,400. What was the amount of direct materials charged to Job number 83? a. 3,400 b. 4,250 c. 8,350 d. 7,580arrow_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_forward
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