Solution Chapter 3 l Cost Accounting Planning and Control by Matz.Hammer and Usry 9th Edition.

Exercises Chapter 3

1. Manufacturing Costs

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

2 Work in Process Ending = 140000Less Direct Labour= 50000FOH 80% of Labour 40000 90000Direct Material Cost 50000

2. Manufacturing Costs

Direct Material Cost= 280000Direct Labour Cost= 320000FOH CostsIndirect Labour= 80000Indirect Material= 20000Other FOH= 124000 224000Total Manufacturing Costs= 824000Coversion Cost= 544000Rate of Direct Labour = 0.5882353

Closing Finished Goods= 176000Less Direct Material Cost= 40000Conversion cost= 136000Labour Cost= 80000FOH Cost 56000

3. Manufacturing CostsTelevane CompanyCost of goods Manufactured and Sold StatementFor the Period ended on 31st, December 19b

Description Amount$ $ $

Direct MaterialOpening Inventory of Raw Material 751 Add Purchases 336Cost of Material Available for use 411Less: Closing Inventory of Raw Material 85

Direct Material Used 326Direct Labour Cost 225Factory over head Cost 135Total Manufacturing Cost 686

Add Opening Work in Process Inventory 80Cost of goods to be manufactured 766

Less: Closing Work in process Inventory 302 Cost of Goods manufactured 736

Add Opening Finished Goods Inventory 90Cost of goods available for sale 826

Less: Closing Finished Goods Inventory 1103 Cost of Goods Sold 716

4. Manufacturing Costs

Krieger Company

Material Cost= 13000Direct Labour Cost= 15000Factor Over Head =Molding Department=2.7* 1000= 2700Decorating Department= 5250 7950

1 Estimated Cost to Produce= 35950Mark Up= 16177.5

2 Bid Price= 52127.5

3 Estimate Prime Cost= 28000

4 Estimate Coversion Cost= 22950

5. Income Statement

Hansford Inc.Income StatementFor the Period ended on 30th, September

Description Amount$ $ $

Sales 182000Direct MaterialOpening Inventory of Raw Material 7000Add Purchases 42300Cost of Material Available for use 49300Less: Closing Inventory of Raw Material 7400

Direct Material Used 41900Direct Labour Cost 30000Factory over head Cost 45000Total Manufacturing Cost 116900

Add Opening Work in Process Inventory 9600Cost of goods to be manufactured 126500

Less: Closing Work in process Inventory 130001 Cost of Goods manufactured 113500

Add Opening Finished Goods Inventory 15000Cost of goods available for sale 128500

Less: Closing Finished Goods Inventory 17500Cost of Goods Sold at Normal 111000

Add/Less FOH Variance 3200Cost of Goods Sold at actual 114200Gross Profit 67800

Less Operating ExpensesMarketing Expenses 14100Admn Expenses 22900Total Expenses 37000Net Profit 30800

6. Job Order cost Sheet.

Wadsworth Machine Works Job Order Cost Sheet

Direct Material Cost9/14 Issued 6009/20 Issued 3319/22 Issued 200

Total 1131

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

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

Total Cost of Manufacturing 3000Mark UP 40% 1200Sale Price 4200

7. Job Order Costing

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

a Work in Process Job 36 Job Cost Sheet 44000Work in Process Job 37 Job Cost Sheet 34000Work in Process Job 38 Job Cost Sheet 32000

Material Control Store Ledger Card 110000Direct Material issued to Production

b Work in Process Job 36 Job Cost Sheet 40000Work in Process Job 37 Job Cost Sheet 48000Work in Process Job 38 Job Cost Sheet 42000

Payroll Control Pay roll sheet 130000Payroll distributed to work in process

c Work in Process Job 36 Job Cost Sheet 24000Work in Process Job 37 Job Cost Sheet 28800

Work in Process Job 38 Job Cost Sheet 25200FOH Applied FOH analysis 78000

FOH applied to Production

d Finished Job 36 Job Cost Sheet 144000Finsihed Job 37 Job Cost Sheet 128800

Work in Process Job 36 Job Cost Sheet 144000Work 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 36000Work in Process Job 98 30000Work in Process Job 99 40000

Material Control 106000Direct Material issued to Production

b Work in Process Job 97 72000Work in Process Job 98 70000Work in Process Job 99 80000

Payroll Control 222000Payroll distributed to work in process

c Work in Process Job 97 36000Work in Process Job 98 35000Work in Process Job 99 40000

FOH Applied 111000FOH applied to Production

d Finished Job 97 240000Finsihed Job 98 135000

Work in Process Job 97 240000Work in Process Job 98 135000

Job No. 36 & 37 Completed

e Cost of Sales Job No. 97 240000Finished Job 97 240000

Cost of Sale of Job No 97 recorded

f Accounts Receivables 300000Sales 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 ProcessOpening 40000 O/b 35000

CGS 375000 Material 90000 F.Goods 390000WIP 390000 Labour 160000

Closing 55000 FOH 120000 Closing 15000430000 430000 405000 405000

3 Material 4 Factor Over Head ControlO/B 5000 Applied 120000

WIP 90000 Sundry 117000Purchases 95000 CGS 3000 CGS

Closing 10000 Closing 0120000 120000

100000 100000

5 Applied FOH 6 Cost of Goods Sold at NormalOpening 400000 O/B 600000WIP 120000 F.Goods 375000 FOH

Closing 520000520000 520000 Closing Closing 975000

975000 975000

6 Cost of Goods Sold at actualO/B 600000 foh 3000F.Goods 375000

Closing Closing 972000975000 975000

Amount

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

a Work in Process Control 370000Material Contorl 90000Payroll Control 160000FOH Applied 120000

Material Labour & FOH Charged to Production

b Finished Goods 390000Work in Process Control 390000

Work in Process Completed and transferred to Finished goods

c Cost of Goods Sold 375000Finished Goods 375000

Cost of Goods Sold Recorded

d FOH Applied 3000Cost of Goods Sold 3000

Under applied FOH Recorded

e Material Control 95000Voucher Payable 95000

Problems Chapter 3

3.1 Manufacturing Costs

Hulse CompanyCost of Goods Sold StatementFor the Period ended on 31st, December

Description Amount$ $ $

Direct MaterialOpening Inventory of Raw Material 20000Add Purchases 58000Cost of Material Available for use 78000Less: Closing Inventory of Raw Material 18000

Direct Material Used 60000Direct Labour CostGrinding Department 8000*5.6 44800Machining Department 4600*6 27600 72400Factory over head CostGrinding Department 8000*6 48000Machining Department 4600*8 36800 84800

1 Total Manufacturing Cost 217200Add Opening Work in Process Inventory 15000

Cost of goods to be manufactured 232200Less: Closing Work in process Inventory 17600

2 Cost of Goods manufactured 214600Add Opening Finished Goods Inventory 22000

Cost of goods available for sale 236600Less: Closing Finished Goods Inventory 17000

3 Cost of Goods Sold 219600

4 Coversion Cost 157200

5 Cost of Material Purchased 58000

3.1

Ledger Accounts1 Material Control 4 Work in process

O/B 20000 WIP 60000 O/b 15000

Purchases 58000 FOH app 84800 F Goods 214600Payroll 72400

Closing 18000 material 60000 Closing 17600232200 232200

78000 780005 Finished Goods

Opening 220002 Accrued Payroll CGS (5) 219600

V/Payable 72400 WIP G.Dept 44800 WIP 214600WIP M.Dept 27600 Closing 17000

236600 23660072400 72400

3 FOH Applied 6 Cost of Goods SoldFOH 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 processMaterial 84800Labour 72400FOH 60000

Total Manufacturing cost 2172002 Add Opeing WIP 15000

Goods to be Manufactured 232200Less Closing WIP 17600Cost of Goods Mfgd 214600

3 add opeing F. goods 22000Cost of Goods to be sold 236600Less Closing F.goods 17000Cost of Goods Sold 219600

4 Conversion CostDirect MaterIal 72400

Applied FOH 60000132400

5 Material ControlO/B 20000 WIP 60000Purchases 58000

Closing 18000

78000 78000

3.2 Manufacturing Costs

Ledger Accounts

1 Finished Goods 2 Work in processOpening 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 SoldO/B 10000 WIP 35000 F.Goods 230000a 50000 FOH Cont 5000

Closing 25000 C/B 235000235000 235000

60000 60000

5 Accrued Payroll 6 FOH Controal Payed 140000 Opening 10000 Acc Dep 10000 FOH App 75000

Direct Lab 100000 Payroll 50000Closing 20000 Ind Lab 50000 Sundry acc 20000 CGS 5000

160000 15000080000 80000

7 FOH Applied 8 Accounts PayablesO/B 20000

FOH Cont 75000 WIP 75000 Cash 55000 Purchases 50000

Closing 1500075000 75000 70000 70000

Problem 3-3

1) Cost of goods sold section

Columbus CompanyCost of Goods Sold StatementFor the Period ended on 31st October

Description Amount$ $ $

Direct MaterialOpening Inventory of Raw Material 40700Add Purchases 24800Cost of Material Available for use 65500Less: Closing Inventory of Raw Material 35700

Direct Material Used 29800Direct Labour Cost 18600Factory over head Cost 27450Total Manufacturing Cost 75850

Add Opening Work in Process Inventory 4070Cost of goods to be manufactured 79920

Less: Closing Work in process Inventory 44401 Cost of Goods manufactured 75480 75180/20400 3.7

Add Opening Finished Goods Inventory 9800Cost of goods available for sale 85280

Less: Closing Finished Goods Inventory 9250 (2800+20400-20700) 2500Cost of Goods Sold at Normal 76030

2. Income Statement for October

ColumbusIncome StatementFor the Period ended on 31st October

Description Amount$ $ $

Sales 144900Less returns 1300

Net Sales 143600Cost of Goods Sold at Normal 76030Gross Profit 67570

Less Operating ExpensesMarketing Expenses

Paid 25050Dep Building 360Dep Equipment 192 25602

Admn ExpensesPaid 19700Dep Building 240Dep Equipment 288 20228

Total Expenses 45830Net Profit 21740

3 Over /Under Applied FOH

FOH Control Account

V/P 20100 FOH Applied 27450Material Control 3950Dep on Building 1800Dep on M & Equip 9600 CGS 12400Indirect Laobur 4400

39850 39850

Problem 3-4

Morrisville CanningIncome StatementFor the Period ended on 31st, December 19 A

Description Amount$ $ $

Sales 60000Direct MaterialOpening Inventory of Raw Material 4000Add Purchases 15000

Cost of Material Available for use 19000Less: Closing Inventory of Raw Material 2000

Direct Material Used 17000Direct Labour Cost 9000Factory over head Cost 9000Total Manufacturing Cost 35000

Add Opening Work in Process Inventory 2000Cost of goods to be manufactured 37000

Less: Closing Work in process Inventory 10001 Cost of Goods manufactured 36000

Add Opening Finished Goods Inventory 6000Cost of goods available for sale 42000

Less: Closing Finished Goods Inventory 4000Cost of Goods Sold at Normal 38000

Add/Less FOH Variance 2000Cost of Goods Sold at actual 40000Gross Profit 20000

Less Operating ExpensesMarketing Expenses 6000Admn Expenses 9000Total Expenses 15000Net Profit 5000

Cash Account

O/B 5000 Material 15000Sales 60000 Labour 9000

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

C/B 1900065000 46000

Morrisville Canning CompanyBalance Sheet

As on 31st December, 19AAssets $ Liabilities & Equities $

Cash 19000 Current Liabilites 17500

Accounts Receivables 10000 Common Stock 30000Finished Goods 4000 Retained Earnings 10000Work in Process 1000 Profit 5000 15000Materials 2000Prepaid expenses 500Property Plant etc 30000Less Depreciation 4000 26000

62500 62500

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

a Material Control 6000Voucher Payable 6000

b WIP Job 2001 2500WIP Job 2002 1400

Material Control 3900

c WIP Job 2003 1800Material Control 1800

d FOH Control 1700Material Control 1700

e Material Control 500WIP Job 2001 400FOH Control 100

f Voucher Payble 600Material Control 600

g Pay Roll Control 10000FICA taxes Payable 750Fedral Income tax Payable 1050Accrued Payroll 8200

h Accrued Payroll 8200Voucher Payable 8200

Voucher Payable 8200Bank 8200

i60%

WIP Job 2001 50% 3000WIP Job 2002 30% 1800WIP Job 2003 20% 1200

20% FOH Control 200012% Sales Exp Control 1200

8% Admn Exp Control 800Payroll Control 10000

j 80% FOH Control 936 (8000/10000)*117012% Sales Exp Control 140.4 (1200/10000)*1170

8% Admn Exp Control 93.6 (800/10000)*11707.5% FICA Tax payable 7503.4% State Unemp Tax payble 3400.8% Fed. Unemp Tax payble 80

1170k FOH Control 1504

Voucher Payable 1504Voucerh Payable 1504

Bank 1504

l WIP Job 2001 3000WIP Job 2002 1800WIP Job 2003 1200

FOH Applied 6000FOH Applied 6000

FOH Control 6000

WIP Job 2001

O/B 10000 Material Control 400Material Control 2500 Finished Goods 18100Payroll Control 3000FOH Applied 3000

18500 18500

m Cost of Goods Sold 18100WIP Job 2001 18100

Accounts Receivable 22500Sales 22500

n Cost of Goods Sold 8000Finished Goods 8000

Accounts Receivable 10000Sales 10000

o Cash 26000Accounts Recivable 26000

FOH Controll Acoountm 1700 mat 100p 2000 foh app 6000payroll tax 936 cgs 40vp 1504

6140 6140

p Cost of Goods Sold 40Foh Control 40

Requirement:1 Journal Entries as above with WIP Job Nos as subsidiary Accounts2 Prepare Individual JOB WIP Account they should be equal to WIP Control Account.

WIP Control AccountOB 16400 e Material 400

b Material 3900c Material 1800i Payroll 6000l Foh app 6000 c/b 33700

34100 33700

WIP Job # 2001OB 10000 e Material 400

b Material 2500

i Payroll 3000l Foh app 3000 c/b 18100

18500 18100

WIP Job # 2002OB 6400

b Material 1400

i Payroll 1800l Foh app 1800 c/b 11400

11400 11400

WIP Job # 2003OB 0 e Material 100

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

4200 4100

WIP Job # 2001 18100WIP Job # 2002 11400WIP Job # 2003 4100WIP Control Account 33600

Problem 6 Job Order cost Sheet.

Topper Inc.Job Order Cost SheetJob NO 621Direct Material Cost

1-Mar O/B 2800IssuedIssued

Total 2800

Direct Labour Cost1-Mar O/B 2100

Total 2100

Factory Overhead1-Mar O/B 1680

Total 1680

Total Cost of Manufacturing 6580Mark UP Sale Price

Topper Inc.Job Order Cost SheetJob NO 622Direct Material Cost

1-Mar O/B 3400IssuedIssued

Total 3400

Direct Labour Cost1-Mar O/B 2700

Total 2700

Factory Overhead1-Mar O/B 2160

Total 2160

Total Cost of Manufacturing 8260Mark UP Sale Price

Topper Inc.Job Order Cost SheetJob NO 623Direct Material Cost

1-Mar O/B 1800IssuedIssued

Total 1800

Direct Labour Cost1-Mar O/B 1350

Total 1350

Factory Overhead1-Mar O/B 1080

Total 1080

Total Cost of Manufacturing 4230Mark UP Sale Price

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

a Material Control 22000Voucher Payable 22000

b WIP Job 621 5300WIP Job 622 7400WIP Job 623 5900FOH Control 2400

Material Control 21000

c Material Control 600WIP 622 400FOH Control 200

d Voucher Payble 800Material Control 800

e Pay Roll Control 380007.50% FICA taxes Payable 2850

11.50% Fedral Income tax Payable 437081% Accrued Payroll 30780

Accrued Payroll 30780Voucher Payable 30780

Voucher Payable 8200Bank 8200

f

55%WIP Job 621 6420 0.307177WIP Job 622 8160 0.390431WIP Job 623 6320 20900 0.302392

20% FOH Control 760015% Sales Exp Control 570010% Admn Exp Control 3800

Payroll Control 38000

g 75% FOH Control 5956.5015% Sales Exp Control 1191.3010% Admn Exp Control 794.20

7.5% FICA Tax payable 2850.05.4% State Unemp Tax payble 2052.08.0% Fed. Unemp Tax payble 3040.0

7942h FOH Control 5500

Voucher Payable 3250Acc.Dep Factory Building 2000Prepaid Insurance 250

l WIP Job 2001 5136WIP Job 2002 6528WIP Job 2003 5056

80% dlc20900 FOH Applied 16720FOH Applied 16720

FOH Control 16720

MaterialWIP Job 621 5300

O/B 14000 WIP Job 622 7400V. Payable 22000 WIP Job 623 5900WIP 622 400 FOH Control 2400FOH Control 200 V/P 800

C/B 1480036600 36600

Work in Process

O/B 19070 Material Control 400Material Control 18600 Finished Goods 53384Payroll Control 20900

FOH Applied 16720C/B 21506

75290 53784

Finished Goods

O/B 15000 Cost of Goods Sold 53384WIP 53384

C/B 1500068384 53384

WIP Job 621O/B 6580Material Control 5300Payroll Control 6420FOH Applied 5136

Fiinshed Goods 23436

23436 23436

WIP Job 622O/B 8260 Material Contrl 400Material Control 7400Payroll Control 8160FOH Applied 6528

Fiinshed Goods 29948

30348 30348

WIP Job 623O/B 4230Material Control 5900Payroll Control 6320FOH Applied 5056

C/B 21506

21506 21506

j Finished Goods 53384

WIP Job 621 23436WIP Job 622 29948

k Accounts Receivable 74737.6Sales 74737.6

l Cash 69450Accounts Recivable 69450

Job Order cost Sheet.

Topper Inc.Job Order Cost SheetJob NO 621Direct Material Cost

1-Mar O/B 2800Current 5300

Total 8100

Direct Labour Cost1-Mar O/B 2100

Current 6420Total 8520

Factory Overhead1-Mar O/B 1680

Current 5136Total 6816

Total Cost of Manufacturing 23436Mark UP 9374.4Sale Price 32810.4

Topper Inc.Job Order Cost SheetJob NO 622Direct Material Cost

1-Mar O/B 3400Current 7000

Total 10400

Current Direct Labour Cost1-Mar O/B 2700

Current 8160Total 10860

Factory Overhead1-Mar O/B 2160

Current 6528Total 8688

Total Cost of Manufacturing 29948Mark UP 11979.2Sale Price 41927.2

Topper Inc.Job Order Cost SheetJob NO 623Direct Material Cost

1-Mar O/B 1800Current 5900

Total 7700

Direct Labour Cost1-Mar O/B 1350

Current 6320Total 7670

Factory Overhead1-Mar O/B 1080

Current 5056Total 6136

Total Cost up to date 21506

Sechdule of InventoriesMaterials 14800Work in Process 21506Finished Goods 15000

Problem 7 Finished GoodsO/B 78830 CGS 94501.65WIP 94501.65 C/B 78830.00

173331.7 173331.65

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

475895.2 475895.15

MaterialO/B 65000 WIP 53730V/Payable 42300V/Payable 5800 C/B 59370

113100 113100

FOH ControlPrepaid Insurance 830 O/B 12300Taxes Payable 845 FOH Applied 30660.15Dep-Machinry 780Dep-Building 840

V/Payalbe 8000Indirect Supplies 1910Pay roll control 12480Employer taxes 15256.87C/B 2018.28

42960.15 42960.15

WIP Job 204O/B 50460 Finished Goods 94501.65Payroll Control 26844Material Control 9480FOH Applied 7717.65

94501.65 94501.65

WIP Job205O/B 118060Payroll Control 22750Material Control 11320FOH Applied 7475 C/B 159605

159605 159605

WIP Job 206O/B 124101Payroll Control 28920Material Control 10490FOH Applied 8774.5 C/B 172285.5

172285.5 172285.5

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

49503 49503

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

a Material Control 42300Voucher Payable 42300

b Material Contorl 5800Voucher Payable 5800

c WIP Job 204 26844WIP Job 205 22750WIP Job 206 28920WIP Job 207 20370FOH Control 12480

Payroll Control 111364

Payroll Contorl 1113647.50% FICA Tax payable 8352.3

11.50% Emp Income Tax payable 12806.8681% Accrued Payroll 90204.84

Accrd Payroll 90204.84Voucher Payable 90204.84

d FOH Control 15256.877.5% FICA Tax payable 8352.35.4% State Unemp Tax payble 6013.70.8% Fed. Unemp Tax payble 890.9

15256.87

e WIP Job 204 9480

WIP Job 205 11320WIP Job 206 10490WIP Job 207 22440

Material Control 53730

f FOH Control Account 13205Prepaid Insurance 830Taxes Payable 845Dep-Machinry 780Dep-Building 840V/Payalbe 8000Indirect Supplies 1910

g WIP Job 204 2.3 3355.5 7717.65WIP Job 205 2.3 3250 7475WIP Job 206 2.3 3815 8774.5WIP Job 207 2.3 2910 6693

FOH Applied 30660.15

FOH Applied 30660.15FOH Control 30660.15

h A/R 117500Sales 117500

Cost of Goods Sold 94501.65Finished goods 94501.65

2 JOB O/B D.MaterialD.Labour FOH Total204 50460 9480 26844 7717.65 94501.65205 118060 11320 22750 7475 159605206 124101 10490 28920 8774.5 172285.5207 0 22440 20370 6693 49503

292621 53730 98884 30660.15 183274.2

3 Over Applied FOH 2018.28

Problem 8