Question 1 (20 marks)
ABC Company employs a job-order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:
1
Direct materials requisition during the month:
Job 56
$10,000
Job 57
$14,000
Job 58
$16,000
$40,000
2
Direct labour incurred and charged to jobs was:
Job 56
$12,000
Job 57
$16,000
Job 58
$18,000
$46,000
3
Manufacturing overhead was applied based on 75% of direct labour costs.
4
Actual manufacturing overhead costs totalled:
$36,000
5
Job 56 consisting of
2000 units
Job 58 consisting of
400 units
These jobs were completed during the month.
INSTRUCTIONS
Prepare journal entries to record the above transactions.
How much manufacturing overhead was applied to Job 57 during the month?
Calculate the unit costs of Jobs 56 and 58.
What is the balance in Work in Process Inventory at the end of the month?
Determine if manufacturing overhead was under- or over-applied during the month. By how much?
Question 2 (20 marks)
ABC Manufacturing is a small manufacturer that uses machine hours as its activity base for assignment of overhead costs to jobs.
The company estimated the following amounts for the current year and for Job 62.
Company
Job 62
Direct Materials
$60,000
$4,000
Direct Labour
$25,000
$2,500
Manufacturing Overhead
$54,000
Machine Hours
90,000
1,350
During the Year:
94,000 Actual Machine Hours
$54,000 Actual Overhead Costs
INSTRUCTIONS
How much is predetermined overhead rate?
How much are the total manufacturing costs of Job 62?
How much is total overhead over- or under-applied for the year?
What is the gross profit before adjusting for any under-applied or over-applied overhead when $15,000 equals the total proceeds from the sale of Job 62?
Question 3 (20 marks)
The following information is available for ABC Company at the end of last year:
Start of Year
End of Year
Finished Goods
$25,000
$26,000
Work in Process
$160,000
$153,000
Direct Materials
$15,000
$14,500
During the year the following information was recorded:
$75,000
Raw Materials Bought
$10,000
Indirect Materials
$125,000
Total Wages
$80,000
Direct Labour
$20,000
Indirect Labour
Balance was Sales and Administration
$160,000
Other Manufacturing Overhead
$180,000
Manufacturing Overhead Applied
INSTRUCTIONS
Prepare a cost of goods manufactured schedule for last year.
Calculate the over- or under-applied manufacturing overhead for the year.
Question 4 (20 marks)
ABC Manufacturing produces a product in two departments: production and assembly.
The company uses a process cost accounting system.
Prepare the journal entries to record the following transactions:
Descriptions not needed.
A
$125,000
Purchased Raw Materials on Account
B
$80,000
Raw Materials Requisitioned for Production Dept
$15,000
Raw Materials Requisitioned for Assembly Dept
C
$175,000
Direct Labour Costs Incurred
D
$50,000
Factory Labour Used by Production Dept
$25,000
Factory Labour Used by Assembly Dept
E
Manufacturing Overhead is based on machine hours in each dept.
140
hrs
$26.00
/Machine hr Production Dept
600
hrs
$19.00
/Machine hr Assembly Dept
F
$100,000
Completed Production Dept sent to Assembly Dept.
G
$80,000
Completed Assembly Dept transferred to Finished Goods.
H
$70,000
Finished Goods sold on account.
$110,000
Value of the sale.
Question 5 (20 marks)
ABC Company has several processing departments. Costs to be accounted for in the assembly department for October were, $ 1,202,400.
Work in Process Inventory, Oct 1
$29,000
Direct Materials
$16,500
Conversion Costs
$916,000
Direct Materials Added During Oct
$100,000
Direct Labour
$140,900
Manufacturing Overhead
25,000
units were in beginning work in process.
425,000
units started this month.
35,000
units in ending inventory.
40%
complete in terms of conversion costs.
100%
of Direct Materials are added at the start.
INSTRUCTIONS
Using the Weighted-Average Method,
Determine the equivalent units of production and unit production costs for the assembly department.
Determine the assignment of costs to goods completed and transferred out, and work in process inventory.
Prepare a production cost report for the assembly department for October.