Professional Documents
Culture Documents
Problem 1:
Economic order quantity; order and carrying cost; order point. Lopez Co. has the following data available relative to its investment in materials: Number of units of material used annually ........................ Number of workdays in a year ........................................... Cost of placing an order ..................................................... Annual carrying cost per unit of inventory ........................
Instructions:
1. Compute the economic order quantity. 2. Using the above data, compute the order size that results in the minimum total order and carrying cost by completing the following table. (1) Order Size (2) Number of Orders (3) Total Order Cost (4) Average Inventory (5) (6) Total Total Order and Carrying Cost Carrying Costs
200 100 67 50 40 33 29 25
3. If the company requires a safety stock of 200 units and has an anticipated lead time of 5 days, what is the order point?
(1/2 *400)+200=
Problem 2:
Inventory costing methods. Chicago Clay, Inc. makes the following purchases and issues of a new material during March: March 2 8 18 24 31 Received 200 lbs. @ $9; total cost, $1,800. Received 60 lbs. @ $10; total cost, $600. Issued 100 lbs. Received 240 lbs. @ $12; total cost, $2,880. Issued 200 lbs.
Using a perpetual inventory system and the materials ledger cards provided, state the cost of materials consumed and the cost assigned to the inventory at the end of March.
Instructions:
Quantity
200 600
Unit Price
9 10
Unit Price
Unit Price
9 10 9 10 12
Amount
1800 600 900 600 2880
24 31
240
12
240
$_______________ $_______________
Quantity 200
60
Unit Price 9
10
Unit Price
Unit Price 9
10
Amount 1800
600
9 12 12 9 12
24 31
240
12
240 160 40
$_______________ $_______________
Problem 3:
Recording materials transactions. Farnsworth Fabricators, Inc. maintains the following accounts in its general ledger: Materials, Work in Process, Factory Overhead, Accounts Payable, and Cash. The materials account had a debit balance of $75,000 and the cash account had a debit balance of $100,000 on September 1. A summary of materials transactions for September shows: a. b. c. d. e. f. g. Materials purchased on account, $125,500 Direct materials issued, $90,900 Direct materials returned to storeroom, $3,750 Indirect materials issued, $4,850 Indirect materials returned to storeroom, $720 Payment of invoices, $98,250 Materials on hand at the end of the month were less than the stores ledger balance by $250.
Instructions:
1. Prepare general journal entries in the form provided to record the materials transactions. No. Account Debit Credit
A B C D E F G
Materials Accounts payable Work in Process Materials Materials Work in process Factory Overhead Materials Materials Factory Overhead Accounts Payable Cash Factory Overhead Materials
125,500 12,500 90,900 90,900 3750 3750 4850 4850 720 720 98,250 98,250 250 250
Problem 4:
Computing earnings with incentive compensation. B. Arroyo, an employee of the Cincinnati Cabinet Co., submitted the following data for work activities last week:
Day Units Produced Each Day
Monday ...................................... Tuesday ...................................... Wednesday ................................. Thursday .................................... Friday .........................................
30 32 46 28 34
During the week, Arroyo worked eight hours each day. Compensation was based on a modified wage plan where an employee earns $2.50 per finished unit and is guaranteed a minimum of $10 per hour.
Instructions: Complete the schedule below. (Round labor cost per unit to the nearest whole cent.) Earnings at $10 per Hour Piece-rate Earnings Make-up Guarantee Daily Earnings Labor Cost per Unit
Day
____80______ ______75____ ____$5_____ ______80____ _____ 30_____ ___80_______ ______80____ __________ ____80______ ____.25______
___80_______ ______115____ __________ ____115______ _____.20_____ ____80______ ______70____ _____$10_____ ___80_______ _____.30_____ ____80______ _____85_____ __________ _____85_____ ____.24______
Problem 5: NOTE: Unless otherwise directed, use the following rates in the remaining parts of
this chapter: FICA tax, 8%; FUTA tax, 1%; state unemployment insurance tax, 4%. Assume also that the base wage amounts, beyond which taxes are not due, have not been reached. Computing and journalizing payroll. The information below, taken from the daily time tickets of Musketeer Manufacturing, Inc., summarizes time and piecework for the week ended January 30.
The company operates on a 40-hour week and pays time and a half for overtime. FICA tax deductions should be made for each employee. A 3% deduction is to be made from each employees wage for health insurance. Redford works as a forklift operator; Love is the supervisor; the others work directly on the jobs. Use 15% in computing income tax withheld.
Instructions:
1. Using the form provided below, determine each employees gross pay, deductions, and net pay. Frease Hours worked ................... Piecework ......................... Rate (hourly/piece) ........... Direct labor ....................... Indirect labor .................... Overtime premium ........... Gross pay .......................... Income tax (15%) ............. FICA tax (8%) .................. Health insurance (3%) ...... Total deductions ............... Net pay.............................. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Redford McLean Love Total
2. Prepare journal entries to (a) set up the accrued payroll and other liabilities, (b) pay the payroll, (c) distribute the payroll, and (d) record the employers payroll taxes. Account Debit Credit
(a)
(b)
(c)
(d)
Problem 6:
Accounting for overtime pay. An employee of the Assembly Department is paid $20 per hour for a regular week of 40 hours. During the week ended July 15, the employee worked 50 hours and earned time and a half for the overtime hours.
Instructions:
1. Prepare the entry to distribute the labor cost if the job worked on during overtime was a rush order, the contract price of which included the overtime premium. Account Debit Credit
2. Prepare the entry to distribute the labor cost if the job worked on during overtime was the result of random scheduling. Account Debit Credit