Cost Accounting

Chap 3 Worksheet
Q1) The company estimated that 40,000 direct labor-hours would be required to support the
production planned for the year. It estimated $220,000 of total fixed manufacturing overhead
cost for the coming year and $2.50 of variable manufacturing overhead cost per direct labor-
hour. However The job cost sheet indicates that 27 direct labor-hours (i.e., DLHs) were charged
to Job A.
Required:
 Calculate the estimated total Manufacturing overhead Cost
 Compute predetermined overhead rate
 Calculate the applied manufacturing overhead cost to Job A
Q2) Job WR53 at Company A required $200 of direct materials and 10 direct labor hours at $15
per hour. Estimated total overhead for the year was $760,000 and estimated direct labor hours
were 20,000.
Required:
 What would be recorded as the cost of job WR53?
Q3) Tiger, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined
overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the
period.
Required:
 Close overapplied or underapplied balance to Cost of goods sold
Q4) PearCo’s actual overhead for the year was $650,000 with a total of 170,000 direct labor
hours worked on jobs. How much total overhead was applied to PearCo’s jobs during the year?
Use PearCo’s predetermined overhead rate of $4.00 per direct labor hour.
Assume the overhead applied in ending Work in Process Inventory, ending Finished Goods
Inventory, and Cost of Goods Sold is shown below:-
Work in Process 68,000
Finished goods 204,000
Cost of goods sold 408,000
Total 680,000

Required:
 Close the overapplied or underapplied balance to Cost of Goods Sold
 Allocate the overapplied or underapplied to the following costs

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Q5) Beginning raw materials inventory was $32,000. During the month, $276,000 of raw
material was purchased. A count at the end of the month revealed that $28,000 of raw material
was still present.
Required :
 What is the cost of direct material used?
Q6) Direct materials used in production totaled $280,000. Direct labor was $375,000, and
$180,000 of manufacturing overhead was added to production for the month.
Required:
 What were total manufacturing costs incurred for the month?
Q7) Beginning work in process was $125,000. Manufacturing costs added to production for the
month were $835,000. There were $200,000 of partially finished goods remaining in work in
process inventory at the end of the month.
Required:
 What was the cost of goods manufactured during the month?
Q8) Beginning finished goods inventory was $130,000. The cost of goods manufactured for the
month was $760,000. And the ending finished goods inventory was $150,000.
Required:
 What was the cost of goods sold for the month?
Q9) Smith Corporation has following transactions:-
1. On October 1, Smith Corporation had $5,000 in raw materials on hand. During the
month, the company purchased $45,000 in raw materials.
2. On October 3, Smith had $43,000 in raw materials requisitioned from the storeroom for
use in production. These raw materials included $40,000 of direct and $3,000 of indirect
materials.
3. During the month the employee time tickets included $35,000 of direct labor and $12,000
for indirect labor.
4. During the month the company incurred the following actual overhead costs:
a) Utilities (heat, water, and power) $1,700
b) Depreciation of factory equipment $2,900
c) Property taxes payable on factory $1,000
5. Smith uses a predetermined overhead rate of $3.50 per machine-hour. During the month,
5,000 machine-hours were worked on jobs.
6. During the month, Smith incurred but has not paid sales salaries of $2,000, and
advertising expense of $750.
7. During the period, Smith completed jobs with a total cost of $27,000.

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 8. Smith sold the $27,000 in Finished Goods Inventory to customers for $43,500 on
account.
Required:
 Pass the journal entries of the above transactions in General Journal
 Post these transactions in T accounts (General Ledger)
 Prepare the Trial Balance.
 Prepare the Income Statement
Q10) On April 1, Rutger Corporation had $7,000 in raw materials on hand. The balance for
Work in Process is $ 30,000 and finished goods are $ 10,000
1. During the month, the company purchased on account an additional $60,000 in raw
materials
2. During April, $52,000 in raw materials were requisitioned from the storeroom for use in
production. These raw materials included $50,000 of direct and $2,000 of indirect
materials.
3. In April, the employee time tickets included $60,000 recorded for direct labor and
$15,000 for indirect labor.
4. Assume that Rutger Corporation incurred the following general factory costs during
April:
Utilities (heat, water, and power) . . . . . . . . . . . $21,000
Rent on factory equipment . . . . . . . . . . . . . . . . 16,000

Miscellaneous factory overhead costs . . . . . . . 3,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
5. During April, Ruger Corporation recognized $13,000 in accrued property taxes and that
$7,000 in prepaid insurance expired on factory buildings and equipment.
6. Company recognized $18,000 in depreciation on factory equipment during April.
7. During April, 10,000 machine-hours were worked on Job A and 5,000 machine-hours
were worked on Job B, at machine hour rate is $ 6
8. Company incurred $30,000 in selling and administrative salary costs during April.
9. Assume that depreciation on office equipment during April was $7,000
10. Advertising was $42,000 and that other selling and administrative expenses in April
totaled $8,000
11. Cost of goods manufactured transferred to finished goods of $ 158000.
12. Assume 750 of the 1,000 gold medallions in Job A were shipped to customers by the end
of the month. Because 1,000 units were produced, the unit product cost was $158. Sales
of 750 units are $ 225,000

13. The cost computations have been as follows:

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 Work in process inventory, April 30 $30,000
Finished goods inventory, April 30 (250@60) 15,000
Cost of goods sold, April 30 (750@60) 45000
Total $90,000

Required:
 Pass the journal entries in General Journal for the following transactions.
 Prepare Cost of Goods Manufactured
 Prepare the Cost of Goods Sold and Income statement for the month.
 Calculate the underapplied/overapplied balance if actual overhead costs incurred is
$95,000.
 Close underapplied/overapplied balance to Cost of goods sold
 Allocate underapplied/overapplied balance to following costs.

Q11) Ahmed Corporation is a manufacturer that uses job-order costing. On January 1, the
beginning of its fiscal year, the company’s inventory balances were as follows:

Raw materials $20,000

The company applies overhead cost to jobs on the basis of machine-hours worked. For the
current year, the company’s predetermined overhead rate was based on a cost formula that
estimated $450,000 of total manufacturing overhead for an estimated activity level of 75,000
machine hours.
The following transactions were recorded for the year:
1. Raw materials were purchased on account, $410,000.
2. Raw materials were requisitioned for use in production, $380,000 ($360,000 direct
materials and $20,000 indirect materials).
3. The following costs were accrued for employee services: direct labor, $75,000; indirect
labor, $110,000; sales commissions, $90,000; and administrative salaries, $200,000.

4. Sales travel costs were $17,000.

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 9. Manufacturing overhead was applied to production. Due to greater than expected demand
for its products, the company worked 80,000 machine-hours on all jobs during the year.
10. Goods costing $900,000 to manufacture according to their job cost sheets were
completed during the year.
11. Goods were sold on account to customers during the year for a total of $1,500,000. The
goods cost $870,000 to manufacture according to their job cost sheets

Required:
 Prepare journal entries to record the transactions.
 Post the entries into T-accounts
 Is Manufacturing Overhead underapplied or overapplied for the year?
 Prepare a journal entry to close any balance in the Manufacturing Overhead account to
Cost of Goods Sold.
 Prepare an income statement.