Exercises Chapter 3

1. Manufacturing Costs

1 FOH Rate to Direct Labour

Direct Labour= 800000
FOH = 640000
FOH Rate= 80%

2 Work in Process Ending = 140000

Less Direct Labour= 50000
FOH 80% of Labour 40000 90000
Direct Material Cost 50000

2. Manufacturing Costs

Direct Material Cost= 280000

Direct Labour Cost= 320000
FOH Costs
Indirect Labour= 80000
Indirect Material= 20000
Other FOH= 124000 224000
Total Manufacturing Costs= 824000
Coversion Cost= 544000
Rate of Direct Labour = 0.5882353

Closing Finished Goods= 176000

Less Direct Material Cost= 40000
Conversion cost= 136000
Labour Cost= 80000
FOH Cost 56000

3. Manufacturing Costs
Televane Company
Cost of goods Manufactured and Sold Statement
For the Period ended on 31st, December 19b
Description Amount
$ $ $
Direct Material
Opening Inventory of Raw Material 75
1 Add Purchases 336
Cost of Material Available for use 411
Less: Closing Inventory of Raw Material 85
Direct Material Used 326
Direct Labour Cost 225
Factory over head Cost 135
Total Manufacturing Cost 686
Add Opening Work in Process Inventory 80
Cost of goods to be manufactured 766
Less: Closing Work in process Inventory 30
2 Cost of Goods manufactured 736
Add Opening Finished Goods Inventory 90
Cost of goods available for sale 826
Less: Closing Finished Goods Inventory 110
3 Cost of Goods Sold 716

4. Manufacturing Costs

Krieger Company

Material Cost= 13000

Direct Labour Cost= 15000
Factor Over Head =
Molding Department=2.7* 1000= 2700
Decorating Department= 5250 7950
1 Estimated Cost to Produce= 35950
Mark Up= 16177.5
2 Bid Price= 52127.5

3 Estimate Prime Cost= 28000

4 Estimate Coversion Cost= 22950

5. Income Statement

Hansford Inc.
Income Statement
For the Period ended on 30th, September
Description Amount
$ $ $
Sales 182000
Direct Material
Opening Inventory of Raw Material 7000
Add Purchases 42300
Cost of Material Available for use 49300
Less: Closing Inventory of Raw Material 7400
Direct Material Used 41900
Direct Labour Cost 30000
Factory over head Cost 45000
Total Manufacturing Cost 116900
Add Opening Work in Process Inventory 9600
Cost of goods to be manufactured 126500
Less: Closing Work in process Inventory 13000
1 Cost of Goods manufactured 113500
Add Opening Finished Goods Inventory 15000
Cost of goods available for sale 128500
Less: Closing Finished Goods Inventory 17500
Cost of Goods Sold at Normal 111000
Add/Less FOH Variance 3200
Cost of Goods Sold at actual 114200
Gross Profit 67800

Less Operating Expenses

Marketing Expenses 14100
Admn Expenses 22900
Total Expenses 37000
Net Profit 30800

6. Job Order cost Sheet.

Wadsworth Machine Works

Job Order Cost Sheet
 Direct Material Cost
9/14 Issued 600
9/20 Issued 331
9/22 Issued 200
Total 1131

Direct Labour Cost

week of Sept 20 90 Hrs @$6.20 Hrs 558
week of Sept 26 70 Hrs @$7.30 Hrs 511
Total 1069

Factory Overhead
week of Sept 20 90 Hrs @$5 Hrs 450
week of Sept 26 70 Hrs @$5 Hrs 350
Total 800

Total Cost of Manufacturing 3000

Mark UP 40% 1200
Sale Price 4200

7. Job Order Costing

Amount
Date Description P.R Debit($) Credit($)

a Work in Process Job 36 Job Cost Sheet 44000

Work in Process Job 37 Job Cost Sheet 34000
Work in Process Job 38 Job Cost Sheet 32000
Material Control Store Ledger Card 110000
Direct Material issued to Production

b Work in Process Job 36 Job Cost Sheet 40000

Work in Process Job 37 Job Cost Sheet 48000
Work in Process Job 38 Job Cost Sheet 42000
Payroll Control Pay roll sheet 130000
Payroll distributed to work in process

c Work in Process Job 36 Job Cost Sheet 24000

Work in Process Job 37 Job Cost Sheet 28800
 Work in Process Job 38 Job Cost Sheet 25200
FOH Applied FOH analysis 78000
FOH applied to Production

d Finished Job 36 Job Cost Sheet 144000

Finsihed Job 37 Job Cost Sheet 128800
Work in Process Job 36 Job Cost Sheet 144000
Work in Process Job 37 Job Cost Sheet 128800
Job No 36 & 37 Completed

8. Job Order Costing.

Date Description P.R Debit($) Credit($)

a Work in Process Job 97 36000

Work in Process Job 98 30000
Work in Process Job 99 40000
Material Control 106000
Direct Material issued to Production

b Work in Process Job 97 72000

Work in Process Job 98 70000
Work in Process Job 99 80000
Payroll Control 222000
Payroll distributed to work in process

c Work in Process Job 97 36000

Work in Process Job 98 35000
Work in Process Job 99 40000
FOH Applied 111000
FOH applied to Production

d Finished Job 97 240000

Finsihed Job 98 135000
Work in Process Job 97 240000
Work in Process Job 98 135000
Job No. 36 & 37 Completed

e Cost of Sales Job No. 97 240000

Finished Job 97 240000
Cost of Sale of Job No 97 recorded
f Accounts Receivables 300000
Sales 300000
Job No. 97 Sold on account

9. Journal entries for the Cost Accounting cycle: Predetermied Overhead rate

Ledger Accounts

1 Finished Goods 2 Work in Process

Opening 40000 O/b 35000
CGS 375000 Material 90000 F.Goods 390000
WIP 390000 Labour 160000
Closing 55000 FOH 120000 Closing 15000
430000 430000 405000 405000

3 Material 4 Factor Over Head Control

O/B 5000 Applied 120000
WIP 90000 Sundry 117000
Purchases 95000 CGS 3000 CGS
Closing 10000 Closing 0
120000 120000
100000 100000

5 Applied FOH 6 Cost of Goods Sold at Normal

Opening 400000 O/B 600000
WIP 120000 F.Goods 375000 FOH
Closing 520000
520000 520000 Closing Closing 975000
975000 975000

6 Cost of Goods Sold at actual

O/B 600000 foh 3000
F.Goods 375000

Closing Closing 972000

975000 975000

Amount
 Date Description P.R Debit($) Credit($)

a Work in Process Control 370000

Material Contorl 90000
Payroll Control 160000
FOH Applied 120000
Material Labour & FOH Charged to Production

b Finished Goods 390000

Work in Process Control 390000
Work in Process Completed and transferred to Finished goods

c Cost of Goods Sold 375000

Finished Goods 375000
Cost of Goods Sold Recorded

d FOH Applied 3000

Cost of Goods Sold 3000
Under applied FOH Recorded

e Material Control 95000

Voucher Payable 95000
Problems Chapter 3

3.1 Manufacturing Costs

Hulse Company
Cost of Goods Sold Statement
For the Period ended on 31st, December
Description Amount
$ $ $
Direct Material
Opening Inventory of Raw Material 20000
Add Purchases 58000
Cost of Material Available for use 78000
Less: Closing Inventory of Raw Material 18000
Direct Material Used 60000
Direct Labour Cost
Grinding Department 8000*5.6 44800
Machining Department 4600*6 27600 72400
Factory over head Cost
Grinding Department 8000*6 48000
Machining Department 4600*8 36800 84800
1 Total Manufacturing Cost 217200
Add Opening Work in Process Inventory 15000
Cost of goods to be manufactured 232200
Less: Closing Work in process Inventory 17600
2 Cost of Goods manufactured 214600
Add Opening Finished Goods Inventory 22000
Cost of goods available for sale 236600
Less: Closing Finished Goods Inventory 17000
3 Cost of Goods Sold 219600

4 Coversion Cost 157200

5 Cost of Material Purchased 58000

3.1

Ledger Accounts
1 Material Control 4 Work in process
O/B 20000 WIP 60000 O/b 15000
Purchases 58000 FOH app 84800 F Goods 214600
Payroll 72400
Closing 18000 material 60000 Closing 17600
232200 232200
78000 78000
5 Finished Goods
Opening 22000
2 Accrued Payroll CGS (5) 219600
V/Payable 72400 WIP G.Dept 44800 WIP 214600
WIP M.Dept 27600 Closing 17000
236600 236600
72400 72400

3 FOH Applied 6 Cost of Goods Sold

FOH Control 84800 WIP G.Dept 48000 F.Goods 219600
WIP M.Dept 36800

84800 84800 219600 0

3 FOH Controal
FOH App 84800

0 84800

1 Total Cost of Work put into process

Material 84800
Labour 72400
FOH 60000
Total Manufacturing cost 217200
2 Add Opeing WIP 15000
Goods to be Manufactured 232200
Less Closing WIP 17600
Cost of Goods Mfgd 214600
3 add opeing F. goods 22000
Cost of Goods to be sold 236600
Less Closing F.goods 17000
Cost of Goods Sold 219600

4 Conversion Cost
Direct MaterIal 72400
 Applied FOH 60000
132400
5 Material Control
O/B 20000 WIP 60000
Purchases 58000

Closing 18000

78000 78000

3.2 Manufacturing Costs

Ledger Accounts

1 Finished Goods 2 Work in process

Opening 70000 O/b 50000
CGS (5) 230000 2 FOH app 75000 F Goods 220000 (4)
WIP 220000 Payroll 100000
Closing 60000 1 material 35000 Closing* 40000 (3)
290000 290000 260000 260000
Closing WIP= 5000+15000+20000

3 Material Control 4 Cost of Goods Sold

O/B 10000 WIP 35000 F.Goods 230000
a 50000 FOH Cont 5000

Closing 25000 C/B 235000

235000 235000
60000 60000

5 Accrued Payroll 6 FOH Controal

Payed 140000 Opening 10000 Acc Dep 10000 FOH App 75000
Direct Lab 100000 Payroll 50000
Closing 20000 Ind Lab 50000 Sundry acc 20000 CGS 5000
160000 150000
80000 80000

7 FOH Applied 8 Accounts Payables

O/B 20000
FOH Cont 75000 WIP 75000 Cash 55000 Purchases 50000
 Closing 15000
75000 75000 70000 70000

Problem 3-3

1) Cost of goods sold section

Columbus Company
Cost of Goods Sold Statement
For the Period ended on 31st October
Description Amount
$ $ $
Direct Material
Opening Inventory of Raw Material 40700
Add Purchases 24800
Cost of Material Available for use 65500
Less: Closing Inventory of Raw Material 35700
Direct Material Used 29800
Direct Labour Cost 18600
Factory over head Cost 27450
Total Manufacturing Cost 75850
Add Opening Work in Process Inventory 4070
Cost of goods to be manufactured 79920
Less: Closing Work in process Inventory 4440
1 Cost of Goods manufactured 75480 75180/20400 3.7
Add Opening Finished Goods Inventory 9800
Cost of goods available for sale 85280
Less: Closing Finished Goods Inventory 9250 (2800+20400-20700) 2500
Cost of Goods Sold at Normal 76030

2. Income Statement for October

Columbus
Income Statement
For the Period ended on 31st October
Description Amount
$ $ $
Sales 144900
Less returns 1300
 Net Sales 143600
Cost of Goods Sold at Normal 76030
Gross Profit 67570

Less Operating Expenses

Marketing Expenses
Paid 25050
Dep Building 360
Dep Equipment 192 25602
Admn Expenses
Paid 19700
Dep Building 240
Dep Equipment 288 20228
Total Expenses 45830
Net Profit 21740

3 Over /Under Applied FOH

FOH Control Account

V/P 20100 FOH Applied 27450

Material Control 3950
Dep on Building 1800
Dep on M & Equip 9600 CGS 12400
Indirect Laobur 4400

39850 39850

Problem 3-4

Morrisville Canning
Income Statement
For the Period ended on 31st, December 19 A
Description Amount
$ $ $
Sales 60000
Direct Material
Opening Inventory of Raw Material 4000
Add Purchases 15000
Cost of Material Available for use 19000
Less: Closing Inventory of Raw Material 2000
Direct Material Used 17000
Direct Labour Cost 9000
Factory over head Cost 9000
Total Manufacturing Cost 35000
Add Opening Work in Process Inventory 2000
Cost of goods to be manufactured 37000
Less: Closing Work in process Inventory 1000
1 Cost of Goods manufactured 36000
Add Opening Finished Goods Inventory 6000
Cost of goods available for sale 42000
Less: Closing Finished Goods Inventory 4000
Cost of Goods Sold at Normal 38000
Add/Less FOH Variance 2000
Cost of Goods Sold at actual 40000
Gross Profit 20000

Less Operating Expenses

Marketing Expenses 6000
Admn Expenses 9000
Total Expenses 15000
Net Profit 5000

Cash Account

O/B 5000 Material 15000

Sales 60000 Labour 9000
FOH 8000
(9000+2000-3000)
Admn Exp 6000
Marketing Exp 8000

C/B 19000
65000 46000

Morrisville Canning Company

Balance Sheet
As on 31st December, 19A
Assets $ Liabilities & Equities $
Cash 19000 Current Liabilites 17500
 Accounts Receivables 10000 Common Stock 30000
Finished Goods 4000 Retained Earnings 10000
Work in Process 1000 Profit 5000 15000
Materials 2000
Prepaid expenses 500
Property Plant etc 30000
Less Depreciation 4000 26000
62500 62500

Problem 5
Date Description P.R Debit($) Credit($)

a Material Control 6000

Voucher Payable 6000

b WIP Job 2001 2500

WIP Job 2002 1400
Material Control 3900

c WIP Job 2003 1800

Material Control 1800

d FOH Control 1700

Material Control 1700

e Material Control 500

WIP Job 2001 400
FOH Control 100

f Voucher Payble 600

Material Control 600

g Pay Roll Control 10000

FICA taxes Payable 750
Fedral Income tax Payable 1050
Accrued Payroll 8200

h Accrued Payroll 8200

Voucher Payable 8200
Voucher Payable 8200
Bank 8200
i WIP Job 2001 50% 3000
60% WIP Job 2002 30% 1800
WIP Job 2003 20% 1200
20% FOH Control 2000
12% Sales Exp Control 1200
8% Admn Exp Control 800
Payroll Control 10000

j 80% FOH Control 936 (8000/10000)*1170

12% Sales Exp Control 140.4 (1200/10000)*1170
8% Admn Exp Control 93.6 (800/10000)*1170
7.5% FICA Tax payable 750
3.4% State Unemp Tax payble 340
0.8% Fed. Unemp Tax payble 80
1170
k FOH Control 1504
Voucher Payable 1504
Voucerh Payable 1504
Bank 1504

l WIP Job 2001 3000

WIP Job 2002 1800
WIP Job 2003 1200
FOH Applied 6000
FOH Applied 6000
FOH Control 6000

WIP Job 2001

O/B 10000 Material Control 400

Material Control 2500 Finished Goods 18100
Payroll Control 3000
FOH Applied 3000

18500 18500

m Cost of Goods Sold 18100

WIP Job 2001 18100

Accounts Receivable 22500

Sales 22500
n Cost of Goods Sold 8000
Finished Goods 8000

Accounts Receivable 10000

Sales 10000

o Cash 26000
Accounts Recivable 26000

FOH Controll Acoount

m 1700 mat 100
p 2000 foh app 6000
payroll tax 936 cgs 40
vp 1504

6140 6140

p Cost of Goods Sold 40

Foh Control 40

Requirement:
1 Journal Entries as above with WIP Job Nos as subsidiary Accounts
2 Prepare Individual JOB WIP Account they should be equal to WIP Control Account.

WIP Control Account

OB 16400 e Material 400
b Material 3900
c Material 1800
i Payroll 6000
l Foh app 6000 c/b 33700

34100 33700

WIP Job # 2001

OB 10000 e Material 400
b Material 2500

i Payroll 3000
l Foh app 3000 c/b 18100

18500 18100
 WIP Job # 2002
OB 6400
b Material 1400

i Payroll 1800
l Foh app 1800 c/b 11400

11400 11400

WIP Job # 2003

OB 0 e Material 100

c Material 1800
i Payroll 1200
l Foh app 1200 c/b 4100

4200 4100

WIP Job # 2001 18100

WIP Job # 2002 11400
WIP Job # 2003 4100
WIP Control Account 33600

Problem 6
Job Order cost Sheet.

Topper Inc.
Job Order Cost Sheet
Job NO 621
Direct Material Cost
1-Mar O/B 2800
Issued
Issued
Total 2800

Direct Labour Cost

1-Mar O/B 2100

Total 2100
Factory Overhead
1-Mar O/B 1680

Total 1680

Total Cost of Manufacturing 6580

Mark UP
Sale Price

Topper Inc.
Job Order Cost Sheet
Job NO 622
Direct Material Cost
1-Mar O/B 3400
Issued
Issued
Total 3400

Direct Labour Cost

1-Mar O/B 2700

Total 2700

Factory Overhead
1-Mar O/B 2160

Total 2160

Total Cost of Manufacturing 8260

Mark UP
Sale Price

Topper Inc.
Job Order Cost Sheet
Job NO 623
Direct Material Cost
1-Mar O/B 1800
Issued
Issued
Total 1800

Direct Labour Cost

1-Mar O/B 1350
 Total 1350

Factory Overhead
1-Mar O/B 1080

Total 1080

Total Cost of Manufacturing 4230

Mark UP
Sale Price

Date Description P.R Debit($) Credit($)

a Material Control 22000

Voucher Payable 22000

b WIP Job 621 5300

WIP Job 622 7400
WIP Job 623 5900
FOH Control 2400
Material Control 21000

c Material Control 600

WIP 622 400
FOH Control 200

d Voucher Payble 800

Material Control 800

e Pay Roll Control 38000

7.50% FICA taxes Payable 2850
11.50% Fedral Income tax Payable 4370
81% Accrued Payroll 30780

Accrued Payroll 30780

Voucher Payable 30780
Voucher Payable 8200
Bank 8200
f
 WIP Job 621 6420 0.307177
55% WIP Job 622 8160 0.390431
WIP Job 623 6320 20900 0.302392
20% FOH Control 7600
15% Sales Exp Control 5700
10% Admn Exp Control 3800
Payroll Control 38000

g 75% FOH Control 5956.50

15% Sales Exp Control 1191.30
10% Admn Exp Control 794.20
7.5% FICA Tax payable 2850.0
5.4% State Unemp Tax payble 2052.0
8.0% Fed. Unemp Tax payble 3040.0
7942
h FOH Control 5500
Voucher Payable 3250
Acc.Dep Factory Building 2000
Prepaid Insurance 250

l WIP Job 2001 5136

WIP Job 2002 6528
WIP Job 2003 5056
80% dlc20900 FOH Applied 16720
FOH Applied 16720
FOH Control 16720

Material
WIP Job 621 5300
O/B 14000 WIP Job 622 7400
V. Payable 22000 WIP Job 623 5900
WIP 622 400 FOH Control 2400
FOH Control 200 V/P 800
C/B 14800
36600 36600

Work in Process

O/B 19070 Material Control 400

Material Control 18600 Finished Goods 53384
Payroll Control 20900
 FOH Applied 16720
C/B 21506
75290 53784

Finished Goods

O/B 15000 Cost of Goods Sold 53384

WIP 53384

C/B 15000
68384 53384

WIP Job 621

O/B 6580
Material Control 5300
Payroll Control 6420
FOH Applied 5136
Fiinshed Goods 23436

23436 23436

WIP Job 622

O/B 8260 Material Contrl 400
Material Control 7400
Payroll Control 8160
FOH Applied 6528
Fiinshed Goods 29948

30348 30348

WIP Job 623

O/B 4230
Material Control 5900
Payroll Control 6320
FOH Applied 5056
C/B 21506

21506 21506

j Finished Goods 53384

 WIP Job 621 23436
WIP Job 622 29948

k Accounts Receivable 74737.6

Sales 74737.6

l Cash 69450
Accounts Recivable 69450

Job Order cost Sheet.

Topper Inc.
Job Order Cost Sheet
Job NO 621
Direct Material Cost
1-Mar O/B 2800
Current 5300

Total 8100

Direct Labour Cost

1-Mar O/B 2100
Current 6420
Total 8520

Factory Overhead
1-Mar O/B 1680
Current 5136
Total 6816

Total Cost of Manufacturing 23436

Mark UP 9374.4
Sale Price 32810.4

Topper Inc.
Job Order Cost Sheet
Job NO 622
Direct Material Cost
1-Mar O/B 3400
Current 7000

Total 10400
Current Direct Labour Cost
1-Mar O/B 2700
Current 8160
Total 10860

Factory Overhead
1-Mar O/B 2160
Current 6528
Total 8688

Total Cost of Manufacturing 29948

Mark UP 11979.2
Sale Price 41927.2

Topper Inc.
Job Order Cost Sheet
Job NO 623
Direct Material Cost
1-Mar O/B 1800
Current 5900

Total 7700

Direct Labour Cost

1-Mar O/B 1350
Current 6320
Total 7670

Factory Overhead
1-Mar O/B 1080
Current 5056
Total 6136

Total Cost up to date 21506

Sechdule of Inventories
Materials 14800
Work in Process 21506
Finished Goods 15000
Problem 7 Finished Goods
O/B 78830 CGS 94501.65
WIP 94501.65 C/B 78830.00

173331.7 173331.65

Work in Process
O/B 292621 Finshed Goods 94501.65
Payroll Control 98884
Material Control 53730 C/B 381393.50
FOH Applied 30660.15

475895.2 475895.15

Material
O/B 65000 WIP 53730
V/Payable 42300
V/Payable 5800 C/B 59370

113100 113100

FOH Control
Prepaid Insurance 830 O/B 12300
Taxes Payable 845 FOH Applied 30660.15
Dep-Machinry 780
Dep-Building 840
V/Payalbe 8000
Indirect Supplies 1910
Pay roll control 12480
Employer taxes 15256.87
C/B 2018.28
42960.15 42960.15

WIP Job 204

O/B 50460 Finished Goods 94501.65
Payroll Control 26844
Material Control 9480
FOH Applied 7717.65

94501.65 94501.65

WIP Job205
O/B 118060
Payroll Control 22750
Material Control 11320
FOH Applied 7475 C/B 159605

159605 159605

WIP Job 206

O/B 124101
Payroll Control 28920
Material Control 10490
FOH Applied 8774.5 C/B 172285.5

172285.5 172285.5
 WIP Job 207
O/B
Payroll Control 20370
Material Control 22440
FOH Applied 6693 C/B 49503

49503 49503

Date Description P.R Debit($) Credit($)

a Material Control 42300

Voucher Payable 42300

b Material Contorl 5800

Voucher Payable 5800

c WIP Job 204 26844

WIP Job 205 22750
WIP Job 206 28920
WIP Job 207 20370
FOH Control 12480
Payroll Control 111364

Payroll Contorl 111364

7.50% FICA Tax payable 8352.3
11.50% Emp Income Tax payable 12806.86
81% Accrued Payroll 90204.84

Accrd Payroll 90204.84

Voucher Payable 90204.84

d FOH Control 15256.87

7.5% FICA Tax payable 8352.3
5.4% State Unemp Tax payble 6013.7
0.8% Fed. Unemp Tax payble 890.9
15256.87

e WIP Job 204 9480

 WIP Job 205 11320
WIP Job 206 10490
WIP Job 207 22440
Material Control 53730

f FOH Control Account 13205

Prepaid Insurance 830
Taxes Payable 845
Dep-Machinry 780
Dep-Building 840
V/Payalbe 8000
Indirect Supplies 1910

g WIP Job 204 2.3 3355.5 7717.65

WIP Job 205 2.3 3250 7475
WIP Job 206 2.3 3815 8774.5
WIP Job 207 2.3 2910 6693
FOH Applied 30660.15

FOH Applied 30660.15

FOH Control 30660.15

h A/R 117500
Sales 117500

Cost of Goods Sold 94501.65

Finished goods 94501.65

2 JOB O/B D.MaterialD.Labour FOH Total

204 50460 9480 26844 7717.65 94501.65
205 118060 11320 22750 7475 159605
206 124101 10490 28920 8774.5 172285.5
207 0 22440 20370 6693 49503
292621 53730 98884 30660.15 183274.2

3 Over Applied FOH 2018.28

Problem 8