BSA & BSMA 2

QUIZ 1

(SHOW YOUR SOLUTIONS)

SHORT AND COMPREHENSIVE PROBLEM: 33pts

PROBLEM 1: 6pts

Inventories: April 1 April 30

Raw material $20,000 $17,000
Work in process 12,000 8,000
Finished goods 30,000 39,000

Additional information for April:

Raw material purchased $45,000
Direct labor payroll $36,000
Direct labor rate per hour $ 8.00
Overhead rate per direct labor hour $ 10.00

1. The prime cost incurred was?

2. The conversion incurred was?
3. The cost of goods sold was?

PROBLEM 2: 6pts

Texoma Trucking Company is exploring different prediction models that can be used to forecast indirect
labor costs. One independent variable under consideration is machine hours. Following are matching
observations on indirect labor costs and machine hours for the past six months:

Month Machine hours Indirect labor costs

1 300 $20,000
2 400 $24,000
3 240 $17,000
4 370 $22,000
5 200 $13,000
6 225 $14,000

Using HIGH-LOW method, determine the following:

1. The total flexible cost formula?

2. The total indirect cost labor of Texoma Trucking Company if on the 10th month, they incurred
390 machine hours from operation.
PROBLEM 3: 6pts

The records of Phoenix Corporation revealed the following data for the current year.

Work in Process $ 73,150

Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200

Requirement:

1. Assume, for this question only, actual overhead is $98,700 and applied overhead is $93,250.
Total Manufacturing Cost is:
2. Assume that Phoenix has underapplied overhead of $37,200 and that this amount is
material. What journal entry is needed to close the overhead account? (Round decimals to
nearest whole percent.)
3. Assume that Phoenix has underapplied overhead of $10,000 and that this amount is
immaterial. What is the balance in Cost of Goods Sold after the underapplied overhead is
closed?

PROBLEM 4: 15pts

The Robbins Company manufactures special purpose machines to order. On January 1, there were two
jobs in process, #705 and #706. The following costs were applied to these jobs in the prior year:

Job No.
705 706
Direct material $ 5,000 $ 8,000
Direct labor 4,000 3,000
Overhead 4,400 3,300
Total $13,400 $14,300

During January, the following transactions took place:

* Raw material costing $40,000 was purchased on account.

* Jobs #707, #708, and #709 were started and the following costs were applied to
them:

JOB
707 708 709
Direct materials $3,000 $10,000 $7,000
Direct labor 5,000 6,000 4,000
* Job #705 and Job #706 were completed after incurring additional direct labor costs
of $2,000 and $4,000, respectively
* Wages paid to production employees during January totaled $25,000.
* Depreciation for the month of January totaled $10,000.
* Utilities bills in the amount of $10,000 were paid for operations during December.
* Utilities bills totaling $12,000 were received for January operations.
* Supplies costing $2,000 were used.
* Miscellaneous overhead expenses totaled $24,000 for January.

Actual overhead is applied to individual jobs at the end of each month using a rate based on actual
direct labor costs.

Requirement:

1. Determine the January overhead rate.

2. Determine the cost of each job.
3. Determine the total cost of goods manufactured.