Solutions to Homework Problems for Jobs by David Albrecht

Solutions to Homework Problems for Jobs by David Albrecht Solution to Problem #69 Basic Job Costing. Start Costs on Costs End Job Date April 30 In May Date Disposition 4 April 6 $530 $0 April 25 Sold in May for $700 5 April 20 $400 $250 May 10 Sold in May for $900 6 April 25 $1,250 $0 April 30 Sold in April for $2,100 7 May 5 $0 $450 May 15 Sold in May for $650 8 May 10 $0 $550 June 3 Sold in June for $1,150 9 May 15 $0 $820 May 25 Sold in May for $1,300 10 May 22 $0 $610 May 30 Sold in May for $900 11 May 31 $0 $125 June 10 Sold in June for $2,500 Identify the jobs associated with each of the following, and compute the costs for: Work-in-process May 1 # 5 Cost: $400 Work-in-process May 31 # 8, 11 Cost: $675 = 550 + 125 Finished goods May 1 # 4 Cost: $530 Finished goods May 31 # none Cost: 0 Cost of goods manufactured May # 5, 7, 9, 10 Cost: $2,530 = 650 + 450 + 820 + 610 Equation: BWIP + (DM+DL+MOH)! EWIP DM+DL+MOH = 2,805 = 250+450+550+820+610+125 Cost: $2,530 = 400 + 2,805! 675 Cost of goods sold May # 4, 5,7, 9, 10 346

Cost: $3,060 = 530 + 650 + 450 + 820 + 610 Equation: BFG + CGM! EFG Cost: $3,060 = 530 + 2,530! 0 Sales & gross margin May Sales = $4,450 = 700 + 900 + 650 + 1,300 + 900 GM = $1,390 = 4,450! 3,060 347

Solution to Problem #70 Basic Job Costing. Start Costs on Costs in Job date Sept. 30 October End date Disposition 1723 August 30 $460 $0 Sept. 10 Sold in October, $920 1762 Sept. 20 $380 $0 Sept. 28 Sold in September, $1,050 1821 Sept. 21 $530 $870 Oct. 4 Sold in October, $2,420 1864 Sept. 26 $420 $0 Sept. 30 Sold in October, $865 1870 Sept. 30 $1,250 $400 Oct. 5 Sold in October, $2,100 1901 Oct. 5 $0 $930 Oct. 27 Sold in October, $1,790 1902 Oct. 12 $0 $1,920 Oct. 22 Sold in October, $4,320 1903 Oct. 13 $0 $1,730 Nov. 1 Sold in November, $3,670 1904 Oct. 20 $0 $560 Oct. 25 Sold in November, $2,100 1905 Oct. 25 $0 $495 Nov. 4 Sold in November, $1,040 Identify the jobs associated with each of the following, and compute the costs for: Work-in-process October 1 # 1821, 1870 Cost: $1,780 = 530 + 1250 Work-in-process October 31 # 1903, 1905 Cost: $2,225 = 1730 + 495 Finished goods October 1 # 1723, 1864 Cost: $880 = 460 + 420 Finished goods October 31 # 1904 Cost: $560 Cost of goods manufactured October # 1821, 1870, 1901, 1902, 1904 Cost: $6,460 = 1400 + 1650 + 930 + 1920 + 560 Equation: BWIP + (DM+DL+MOH)! EWIP DM+DL+MOH = 6,905 = 870 + 400 + 930 + 1920 + 1730 + 560 + 495 Cost: $6,460 = 1780 + 6,905! 2225 Cost of goods sold October # 1723, 1821, 1864, 1870, 1901, 1902 Cost: $6,780 = 460 + 1400 + 420 + 1650 + 930 + 1920 Equation: BFG + CGM! EFG Cost: $6,780 = 880 + 6,460! 560 348

Sales & gross margin October Sales = $12,415 = 920 + 2420 + 865 + 2100 + 1790 + 4320 GM = $5,635 = 12,415! 6780 349

Solution to Problem #71 Job Costing. Start Costs on DM DL OH Finish Job Date May 31 June June June Date Disposition 1 May 5 $2,420 $0 $0 $0 May 6 Sold in June for $4,650 2 May 20 $1,250 $250 $300 $150 June 5 Sold in June for $3,700 3 May 25 $750 $0 $0 $0 May 30 Sold in June for $2,100 4 June 5 $0 $920 $600 $300 June 10 Sold in June for $2,500 5 June 10 $0 $1,300 $420 $210 June 25 Sold in June for $3,650 6 June 15 $0 $650 $570 $285 July 15 Sold in July for $4,900 7 June 22 $0 $610 $180 $90 June 30 Sold in July for $1,670 8 June 30 $0 $600 $200 $100 July 18 Sold in July for $3,800 Overhead costs incurred (actual) during June are $1,010. Identify the jobs associated with each of the following, and compute the costs for: Work-in-process June 1 # 2 Cost: $1,250 Work-in-process June 30 # 6, 8 Cost: $2,405 = 1,505 + 900 Finished goods June 1 # 1, 3 Cost: $3,170 = 2420 + 750 Finished goods June 30 # 7 Cost: $880 Cost of goods manufactured June # 2, 4, 5, 7 Cost: $6,580 = 1950 + 1820 + 1930 + 880 Equation: BWIP + DM + DL + MOH! EWIP DM = 4,330 = 250 + 920 + 1300 + 650 + 610 + 600 DL = 2,270 = 300 + 600 + 420 + 570 + 180 + 200 MOH = 1,135 = 150 + 300 + 210 + 285 + 90 + 100 Cost: $6,580 = 1250 + 4330 + 2270 + 1135! 2405 Cost of goods sold June # 1, 2, 3, 4, 5 Cost: $8,870 = 2420 + 1950 + 750 + 1820 + 1930 Equation: BFG + CGM! EFG 350

Cost: $8,870 = 3170 + 6,580! 880 Sales & gross margin June Sales = $16,600 = 4650 + 3700 + 2100 + 2500 + 3650 Overapplied OH = 1135! 1010 = 125 Adjusted CGS = 8870! 125 = 8,745 GM = $7,855 = 16600! 8745 During Jun Work-in-process 7,735 Direct materials inventory 4,330 Direct labor control 2,270 Manufacturing overhead control 1,135 During Jun Manufacturing overhead control 1,010 Accts payable, etc. 1,010 June 30 Finished goods 6,580 Work-in-process 6,580 June 30 Cost of goods sold expense 8,870 Finished goods 8,870 June 30 Manufacturing overhead control 125 Cost of goods sold expense 125 During Jun Accounts receivable 16,600 Sales revenue 16,600 T-account activity coming later. 351

Solution to Problem #72 Job Costing. Start Costs on DM DL OH Finish Job Date Dec 31 Jan Jan Jan Date Disposition a Dec. 22 $1,650 $0 $0 $0 Dec. 29 Sold in Jan. for $3,770 b Jan. 24 $0 $200 $200 $400 Feb. 8 Sold in February for $2,900 c Jan. 15 $0 $380 $290 $110 Feb. 25 Sold in February for $1,750 d Jan. 7 $0 $920 $600 $300 Jan. 10 Sold in Jan. for $2,500 e Jan. 11 $0 $1,300 $280 $500 Jan. 25 Sold in Jan. for $3,650 f Dec. 8 $570 $0 $0 $0 Dec. 29 Sold in Jan. for $1,300 g Dec. 15 $840 $200 $300 $250 Jan. 8 Sold in Jan. for $3,400 h Jan. 19 $0 $800 $500 $650 Jan. 29 Sold in February for $3,670 Overhead costs incurred (actual) during January are $1,800. Identify the jobs associated with each of the following, and compute the costs for: Work-in-process January 1 # g Cost: $ 840 Work-in-process January 31 # b, c Cost: $1,580 = 800 + 780 Finished goods January 1 # a, f Cost: $2,220 = 1650 + 570 Finished goods January 31 # h Cost: $1,950 Cost of goods manufactured January # d, e, g, h Cost: $7,440 = 1820 + 2080 + 1590 + 1950 Equation: BWIP + DM + DL + MOH! EWIP DM = 3,800 = 250 + 920 + 1300 + 650 + 610 + 600 DL = 2,170 = 300 + 600 + 420 + 570 + 180 + 200 MOH = 2,210 = 150 + 300 + 210 + 285 + 90 + 100 Cost: $7,440 = 840 + 3800 + 2170 + 2210! 1580 Cost of goods sold January # a, d, e, f, g Cost: $7,710 = 1650 + 1820 + 2080 + 570 + 1590 352

Equation: BFG + CGM! EFG Cost: $7,710 = 2220 + 7440! 1950 Sales & gross margin January Sales = $14,620 = 3770 + 2500 + 3650 + 1300 + 3400 Overapplied OH = 2210! 1800 = 410 Adjusted CGS = 7710! 410 = 7,300 GM = $7,320 = 14620! 7300 During Jan Work-in-process 8,180 Direct materials inventory 3,800 Direct labor control 2,170 Manufacturing overhead control 2,210 During Jan Manufacturing overhead control 1,800 Accts payable, etc. 1,800 Jan 31 Finished goods 7,440 Work-in-process 7,440 Jan 31 Cost of goods sold expense 7,710 Finished goods 7,710 Jan 31 Manufacturing overhead control 410 Cost of goods sold expense 410 During Jan Accounts receivable 14,620 Sales revenue 14,620 T-account activity coming later. 353

Summary for work done during January: Solution to Problem #73 Multiperiod job costing with journal entries Prior Prior Prior Prior Jan Jan Jan Jan Status Job Started DM DL MOH Total DM DL MOH Total Finished EOM 7-12-04 Dec 13 5,279 2,890 16,390 24,559 24,559 Dec 21 Sold 7-12-06 Dec 21 4,210 6,900 18,960 30,070 200 1,930 625 32,825 Jan 12 Sold 7-12-07 Dec 28 590 1,100 890 2,580 7,100 8,355 9,251 27,296 Jan 05 Sold 8-01-01 Jan 5 3,622 6,328 12,031 21,981 Jan 17 Sold 8-01-02 Jan 12 6,993 3,299 6,991 17,283 Jan 28 FG 8-01-03 Jan 19 4,287 5,290 16,320 25,897 Jan 26 Sold 8-01-04 Jan 28 1,757 847 331 2,935 n/a WIP 57,209 23,959 26,049 45,559 152,776 Work-in-progress 1/1/08 # 7-12-06; 7-12-07 Cost: 32,650 = 30,070 + 2,580 Work-in-progress 1/31/08 # 8-01-04 Cost: 2,935 Finished goods 1/1/08 # 7-12-04 Cost: 24,559 Finished goods 1/31/08 # 8-01-02 Cost: 17,283 Cost of goods manufactured (compute it two ways) # 7-12-06; 7-12-07; 8-01-01; 8-01-02; 8-01-03 Cost: 125,282 = 32,825 + 27,296 + 21,981 + 17,283 + 25,897 Equation: BWIP + DM + DL + MOH! EWIP Cost: 125,282 = 32,650 + 23,959 + 26,049 + 45,559! 2,935 Unadjusted cost of goods sold (compute it two ways) # 7-12-04; 7-12-06; 7-12-07; 8-01-01; 8-01-03 Cost: 132,558 = 24,559 + 32,825 + 27,296 + 21,981 + 25,897 Equation: BFG + CGM! EFG Cost: 132,558 = 24,559 + 125,282! 17,283 Under/over applied OH Actual less applied 49,620! 45,559 = 4,061 underapplied Cost of goods sold (adjusted) 132,558 + 4,061 = 136,619 Sales 196,290 = 37,650 + 51,250 + 36,790 + 29,600 + 41,000 Gross margin Sales less adjusted CGS = Gross margin 196,290! 136,619 = 59,671 354

During Jan Work-in-process 95,567 Direct materials inventory 23,959 Direct labor control 26,049 Manufacturing overhead control 45,559 During Jan Manufacturing overhead control 49,620 Accts payable, etc. 49,620 Jan 31 Finished goods 125,282 Work-in-process 125,282 Jan 31 Cost of goods sold expense 132,558 Finished goods 132,558 Jan 31 Cost of goods sold expense 4,061 Manufacturing overhead control 4,061 During Jan Accounts receivable 196,290 Sales revenue 196,290 T-account activity coming later. Summary for work done during February: Prior Prior Prior Prior Feb Feb Feb Feb Status Job Started DM DL MOH Total DM DL MOH Total Finished EOM 8-01-02 Jan 12 6,993 3,299 6,991 17,283 17,283 Jan 28 Sold 8-01-04 Jan 28 1,757 847 331 2,935 2,686 6,223 8,834 20,678 Feb 12 Sold 8-02-01 Feb 3 6,233 5,368 15,327 26,928 Feb 10 FG 8-02-02 Feb 10 3,843 2,643 8,453 14,939 Feb 21 Sold 8-02-03 Feb 17 3745 4,789 11,379 19,913 Feb 24 Sold 8-02-04 Feb 24 860 1,347 2,528 4,735 n/a WIP 8-02-05 Feb 27 420 683 2,011 3,114 Feb 28 FG 20,218 17,787 21,053 48,532 107,590 Work-in-progress 2/1/08 # 8-01-04 Cost: 2,935 Work-in-progress 2/29/08 # 8-02-04 Cost: 4,735 Finished goods 2/1/08 # 8-01-02 Cost: 17,283 Finished goods 2/29/08 # 8-02-01; 8-02-05 Cost: 30,042 = 26,928 + 3,114 Cost of goods manufactured (compute it two ways) # 8-01-04; 8-02-01; 8-02-02; 8-02-03; 8-02-05 Cost: 85,572 = 20,678 + 26,928 + 14,939 + 19,913 + 3,114 Equation: BWIP + DM + DL + MOH! EWIP 355

Cost: 85,572 = 2,935 + 17,787 + 21,053 + 48,532! 4,735 Unadjusted cost of goods sold (compute it two ways) # 8-01-02; 8-01-04; 8-02-02; 8-02-03 Cost: 72,813 = 17,283 + 20,678 + 14,939 + 19,913 Equation: BFG + CGM! EFG Cost: 72,813 = 17,283 + 85,572! 30,042 Under/over applied OH Actual less applied 42,250! 48,532 = 6,282 overapplied Cost of goods sold (adjusted) 72,813!6,282 = 66,531 Sales 101,868 = 19,600 + 25,735 + 28,690 + 27,843 Gross margin Sales less adjusted CGS = Gross margin 101,868! 66,531 = 35,337 During Feb Work-in-process 87,372 Direct materials inventory 17,787 Direct labor control 21,053 Manufacturing overhead control 48,532 During Feb Manufacturing overhead control 42,250 Accts payable, etc. 42,250 Feb 29 Finished goods 85,572 Work-in-process 85,572 Feb 29 Cost of goods sold expense 72,813 Finished goods 72,813 Feb 29 Manufacturing overhead control 6,282 Cost of goods sold expense 6,282 During Feb Accounts receivable 101,868 Sales revenue 101,868 T-account activity coming later. 356

Solution to Problem #74 Applying overhead 1. Predetermined rate = estimated overhead divided by estimated activity = 90,000 / 15,000 = $6 per machine hour 2. Applied overhead for the period = actual activity times rate = 10,000 * 6 = $60,000 3. Amount of over or under applied overhead? = actual overhead less applied overhead = 0 I hope this didn t surprise you too much. Although there is usually a difference, I suppose it is possible for actual to equal applied, as it is here. Let s say that the actual machine hours was 11,000 with $63,000 total overhead incurred. In this instance, applied overhead would be 11,000*6 = 66,000, which is $3,000 over applied. Is that better? 357

Information for the Birkland job-order system. Additional problems Solution to problem #75 Costs DM DL OH Job Started June 28 July July July Completed When sold A July 27 $0 $300 $350 $420 August 12 Sold in August, $1,810 B June 14 $530 $0 $0 $0 June 21 Sold in August, $930 C June 4 $880 $0 $0 $0 June 17 Sold in July, $1,900 D June 7 $410 $210 $470 $690 August 19 Sold in August, $6,800 E July 4 $0 $560 $430 $880 July 21 Sold in August, $4,500 F July 12 0 $500 $400 $60 July 21 Sold in July, $1,250 G June 19 $250 $570 $350 $670 July 3 Sold in July, $1,950 H July 17 $0 $700 $1,300 $1,150 August 8 Sold in September, $8,950 I July 11 $0 $900 $250 $420 July 21 Sold in July, $2,890 J July 11 $0 $520 $435 $725 July 21 Sold in July, $5,200 K June 5 $590 $0 $0 $0 June 13 Sold in June, $1,750 4,260 3,985 5,015 Overhead costs incurred (actual) during July are $4,870. Required: Identify the jobs associated with each of the following, and compute the costs for: Work-in-process, July 1 D, G Costs: 650 = 410 + 250 Work-in-process, July 31 A, D, H Costs: 6,000 = 1,070 + 1,780 + 3,150 Finished goods, July 1 B, C Costs: 1,410 = 530 + 880 Finished goods, July 31 B, E Costs: 2,400 = 530 + 1,870 Journal entries and T-account activity coming later 358

Cost of goods manufactured (CGM), July [Show all work] Compute CGM Compute CGM a second way: E 1,870 BWIP 660 F 960 +DM 4,260 G 1,840 +DL 3,985 I 1,570 +MOH 5,015 J 1,680!EWIP!6,000 CGM 7,920 CGM 7,920 Cost of goods sold unadjusted (CGS), July [Show all work] Compute CGS: Compute CGS a second way: C 880 BFG 1,410 F 960 +CGM +7,920 G 1,840!EFG!2,400 I 1,570 CGS 6,930 J 1,680 CGS 6,930 Amount of over- or under-applied overhead (designate over or under) Applied 5,015 compared to actual of 4,870 = 145 overapplied Gross Margin, March C 1,900 F 1,250 G 1,950 I 2,890 J 5,200 Sales rev 13,190 CGS adj!(6,930! 145) GM 6,405 359

Information for the Anderson job-order system. Solution to problem #76 Costs DM DL OH Job Started Feb 28 March March March Completed When sold A March 4 $0 $560 $320 $800 March 15 Sold in March, $4,300 B Feb 12 $425 $0 $0 $0 February 14 Sold in April, $1,400 C Feb 19 $210 $790 $285 $1,100 April 12 Sold in April, $7,900 D March 16 0 $280 $110 $500 March 29 Sold in March, $1,250 E Feb 28 $400 $610 $400 $1,400 March 16 Sold in March, $5,140 F March 20 $0 $400 $190 $620 April 5 Sold in April, $2,800 G March 25 $0 $360 $250 $600 April 6 Sold in May, $1,950 H March 22 $0 $110 $80 $340 March 24 Sold in March, $510 I March 1 $0 $930 $450 $1,200 March 12 Sold in April, $6,500 J Feb 9 $760 $0 $0 $0 February 12 Sold in February, $2,300 K Feb 12 $1,210 $0 $0 $0 February 28 Sold in March, $2,900 4,040 2,085 6,560 Overhead costs incurred (actual) during March are $6,900. Required: Identify the jobs associated with each of the following, and compute the costs for: Work-in-process, March 1 C, E Costs: 610 = 210 + 400 Work-in-process, March 31 C, F, G Costs: 4,805 = 2,385 + 1,210 + 1,210 Finished goods, March 1 B, K Costs: 1,635 = 425 + 1,210 Finished goods, March 31 B, I Costs: 3,005 = 425 + 2,580 Journal entries and T-account activity coming later 360

Cost of goods manufactured (CGM), March [Show all work] Compute CGM Compute CGM a second way: A 1,680 BWIP 610 D 890 +DM 4,040 E 2,810 +DL 2,085 H 530 +MOH 6,560 I 2,580!EWIP!4,805 CGM 8,490 CGM 8,490 Cost of goods sold unadjusted (CGS), March [Show all work] Compute CGS: Compute CGS a second way: A 1,680 BFG 1,635 D 890 +CGM +8,490 E 2,810!EFG!3,005 H 530 CGS 7,120 K 1,210 CGS 7,120 Amount of over- or under-applied overhead (designate over or under) Applied 6,560 compared to actual of 6,900 = 340 underapplied Gross Margin, March A 4,300 D 1,250 E 5,140 H 510 K 2,900 Sales rev 14,100 CGS adj!(7,120 + 340) GM 6,640 361

Information for the Nesline job-order system. Solution to problem #77 Costs DM DL OH Job Started August 31 Sept Sept Sept Completed When sold A Sept 1 $0 $1,400 $700 $900 Sept 27 Sold in October, $5,200 B Aug 13 $920 $0 $0 $0 August 28 Sold in September, $1,900 C Aug 3 $1,600 $0 $0 $0 August 12 Sold in August, $3,300 D Aug 11 $870 $0 $0 $0 August 14 Sold in October, $2,300 E Sept 23 $0 $700 $350 $150 October 6 Sold in October, $2,250 F Sep 18 0 $1,300 $600 $500 Sept 28 Sold in September, $4,300 G Aug 15 $1,300 $1,800 $1,250 $1,100 October 12 Sold in October, $9,700 H Sept 10 $0 $900 $600 $800 Sept 24 Sold in September, $4,800 I Sept 17 $0 $600 $900 $600 Sept 29 Sold in October, $3,600 J Sept 15 $0 $350 $150 $400 Sept 23 Sold in September, $1,200 K Aug 28 $400 $600 $200 $700 Sept 16 Sold in September, $3,700 $7,650 $4,750 $5,150 Overhead costs incurred (actual) during September are $4,900. Required: Work-in-process, May 1 G, K Costs: 1,700 = 1,300 + 400 Work-in-process, May 31 E, G Costs: 6,650 = 1,200 + 5,450 Finished goods, May 1 B, D Costs: 1,790 = 920 + 870 Finished goods, May 31 A, D, I Costs: 5,970 = 3,000 + 870 + 2,100 362

Cost of goods manufactured (CGM), May A, F, H, I, J, K Compute CGM 12,600 = 3,000 + 2,400 + 2,300 + 2,100 + 900 + 1,900 Compute CGM a second way: BWIP +1,700 + DM +7,650 + DL +4,750 + MOH +5,150! EWIP!6,650 CGM 12,600 Cost of goods sold unadjusted (CGS), May B, F, H, J, K Compute CGM 8,420 = 920 + 2,400 + 2,300 + 900 + 1,900 Compute CGM a second way: BFG +1,790 + CGM +12,600! EFG!5,970 CGM 8,420 Amount of over- or under-applied overhead (designate over or under) Actual 4,900 Applied 5,150 250 over-applied Gross Margin, May Sales revenue 15,900 (1,900 + 4,300 + 4,800 + 1,200 + 3,700) CGS adj 8,170 (8,420! 250) Gross margin 7,730 Journal entries and T-account activity coming later. 363