Chapter 6: System design:Job-order Costing

Problem 1
Requirement 1
a.) Raw Materials Inventory 210,000
Accounts Payable 210,000
To record purchase of raw material on account.

b.) Work in Process Inventory 178,000

Manufacturing Overhead Control 12,000
Raw Material Inventory 190,000

c.) Work in Process Inventory 90,000

Manufacturing Overhead Control 110,000
Wages Payable 200,000

d.) Manufacturing Overhead Control 40,000

Accumulated Depreciation 40,000

e.) Manufacturing Overhead Control 70,000

Accounts Payable 70,000

f.) Work in Process Inventory 240,000

Manufacturing Overhead Applied 240,000

g.) Finished Goods Inventory 520,000

Work in Process Inventory 520,000

h.) Accounts Receiveble 600,000

Sales 600,000
Cost of Good Sold 480,000
Finished Goods Inventory 480,000
Requirement 2

Manufacturing Overhead Control Work in Process Inventory

b.) 12,000 Beg. Bal. 42,000 g.) 520,000
c.) 110,000 b.) 178,000 520,000
d.) 40,000 c.) 90,000
e.) 70,000 f.) 240,000
232,000 550,000
30,000

Problem 2
Requirement 1
Predetermined overhead rate
228,000
204,000
192,000
216,000
Total Estimated Manufacturing Overhead 840,000

80,000
40,000
20,000
60,000
Total number of unites produced 200,000
Per unit
Total Estimated Manufacturing Overhead 840,000
4.20
Total number of unites produced 200,000

Direct Materials Cost as basis for predetermined rate

240,000
120,000
60,000
180,000
Total number of unites produced 600,000

Percent
Total Estimated Manufacturing Overhead 840,000
140
Total Direct Materials Cost 600,000

Direct Labor cost as basis for predetermined rate:

96,000
48,000
24,000
72,000
Total Direct Labor Cost 240,000
Percent
Total Estimated Manufacturing Overhead 840,000
350
Total Direct Labor Cost 240,000
j.) Factory Ove
Cash

k.) Selling and

Requirement 2

1st 2nd 3rd 4th

Direct Materials 240,000 120,000 60,000 180,000
Direct Labor 96,000 48,000 24,000 72,000
Manufacturing Overhead
Applied at 4.20 per unit
140% Direct Material Cost or
350% Direct Labor Cost 336,000 168,000 84,000 252,000

Total Cost 672,000 336,000 168,000 504,000

Number of Units Produced 80,000 40,000 20,000 60,000
Estimated Cost Per Unit 8.40 8.40 8.40 8.40

Problem 3
Requirement 1
Budgeted Factory Overhead 1,235,475 14.25
Budgeted Direct Labor-hours 86,700

Requirement 2
a.) Raw Materials Inventory 125,000
Accounts Payable 125,000

b.) Raw Materials Inventory (Indirect) 1,800

Accounts Payable 1,800

c.) Work in Process Inventory 87,500

Factory Overhead Control 1,098
Raw Materials Inventory 88,598

d.) Work in Process Inventory 141,900

Factory Overhead Control 46,000
Cash 187,900

e.) Factory Overhead Control 15,230

Cash 15,230

f.) Factory Overhead Control 3,500

Prepaid Insurance 3,500

g.) Factory Overhead Control 8,200

Accumulated Depreciation 8,200

h.) Factory Overhead Control 2,400

Accumulated Depreciation 2,400

i.) Advertising Expense 5,500

Cash 5,500

j.) Factory Overhead Control 13,500

Cash 13,500

k.) Selling and Administrative Expense 13,250

Cash 13,250
l.) Work in Process Inventory 91,912.50
Factory Overhead Control Applied 91,912.50

m.) Finished Goods Inventory 146,000

Work In process Inventory 146,000

n.) Accounts Receivable 132,000

Sales 132,000

Cost of Goods Sold 112,000

Finished Goods Inventory 112,000

Requirement 3

Factory Overhead: 1,098

46,000
15,230
3,500
8,200
2,400
13,500
Actual Factory Overhead Control 89,928
Factory Overhead Control Applied (91,912.50)
(1,984.50)

Factory Overhead Control Applied 1,984.50

Cost of Goods Sold 1,984.50

Requiremen 4
Aries Corporation
Cost of Goods Manufactured and Sold
For the Month Ended August 2019

Purchases 126,800
Raw Materials Inventory Available 126,800
Less: Raw Materials Inventory End (38,202)
Indirect Materials Inventory Used (1,098)
Raw Materials Inventory put into Process 87,500
Direct Labor 141,900
Manufacturing Overhead 89,928
Total manufacturing cost incurred 319,328
Less: Work in Process Inventory – End (175,312.50)
Total Cost of Goods Manufactured 144,015.50
Less: Finished Goods Inventory – End (34,000)
Cost of Goods Sold 110,015.50
Requirement 5
Aries Corporation
Income Statement
For the Month Ended August 2019

Sales 132,000
Less: Cost of Goods Sold (110,015.50)
Gross Margin 21,984.50
Less: Advertisisng Expense (5,500)
Selling and Administrative Expense (13,250)
Net Operating Income 3,234.50