1.

Applied manufacturing overhead = total manufacturing costs  30%

= $2,500,000  30%
= $750,000

Applied manufacturing overhead = direct-labor cost  80%

Direct-labor cost = applied manufacturing overhead  80%

= $750,000  .8
= $937,500

2. Direct-material cost = total manufacturing cost

– direct labor cost
– applied manufacturing overhead
= $2,500,000 – $937,500 – $750,000
= $812,500

3. Let X denote work-in-process inventory on December 31.

Total work-in-process work-in-process cost of

manufacturing + inventory, – inventory, = goods
cost Jan.1 Dec. 31 manufactured

$2,500,000 + .75X – X = $2,425,000

.25X = $2,500,000 – $2,425,000
X = $300,000

Work-in-process inventory on December 31 amounted to $300,000.

EXERCISE 3-29 (25 MINUTES)

JOB-COST RECORD

Job Number TB78 Description teddy bears

Date Started 4/1 Date Completed 4/15

Number of Units Completed 1,000

Direct Material
Date Requisition Number Quantity Unit Price Cost
4/1 101 400 $.80 $320
4/5 108 500 .30 150

Direct Labor
Date Time Card Number Hours Rate Cost
4/1 – 4/8 Various time cards 500 $12 $6,000

Manufacturing Overhead
Date Activity Base Quantity Application Rate Cost
4/15 Direct-labor hours 500 $2 $1,000

Cost Summary
Cost Item Amount
Total Direct Material $ 470
Total Direct Labor 6,000
Total Manufacturing Overhead 1,000
Total Cost $7,470
Unit Cost $ 7.47

Shipping Summary
Units Remaining
Date Units Shipped In Inventory Cost Balance
4/30 700 300 $2,241*

*300 units remaining in inventory$7.47 = $2,241

EXERCISE 3-30 (30 MINUTES)

1. CRUNCHEM CEREAL COMPANY

SCHEDULE OF COST OF GOODS MANUFACTURED
FOR THE YEAR ENDED DECEMBER 31, 20X1
Direct material:
Raw-material inventory, January 1 ..........................................$ 30,000
Add: Purchases of raw material .............................................. 278,000
Raw material available for use .................................................$308,000
Deduct: Raw-material inventory, December 31 ...................... 33,000
Raw material used .................................................................... $275,000
Direct labor ........................................................................................ 120,000
Manufacturing overhead 252,000 *
Total manufacturing costs ................................................................ $647,000
Add: Work-in-process inventory, January 1 .................................... 39,000
Subtotal .............................................................................................. $686,000
Deduct: Work-in-process inventory, December 31 ......................... 42,900
Cost of goods manufactured ............................................................ $643,100

*Applied manufacturing overhead is $252,000 ($120,000210%). Actual manufacturing

overhead is also $252,000, so there is no overapplied or underapplied overhead.

2. Finished-goods inventory, January 1 ................................................................... $ 42,000

Add: Cost of goods manufactured ........................................................................ 643,100
Cost of goods available for sale ............................................................................ $685,100
Deduct: Finished-goods inventory, December 31 ............................................... 46,200
Cost of goods sold ................................................................................................. $638,900
EXERCISE 3-31 (20 MINUTES)

1. Raw-Material Inventory Work-in-Process Inventory

227,000 18,000
174,000 DM 174,000
53,000 DL 324,000
MOH 180,000
Wages Payable 120,000
324,000 576,000

Manufacturing Overhead Finished-Goods Inventory

180,000 30,000
120,000
Sales Revenue 132,000
195,000 18,000

Accounts Receivable Cost of Goods Sold

195,000 132,000

2. REIMEL FURNITURE COMPANY, INC.

PARTIAL BALANCE SHEET
AS OF DECEMBER 31, 20X2
Current assets
Cash....................................................................................................................... XXX
Accounts receivable ............................................................................................. XXX
Inventory
Raw material ....................................................................................................$ 53,000
Work in process ............................................................................................... 576,000
Finished goods ................................................................................................ 18,000

REIMEL FURNITURE COMPANY, INC.

PARTIAL INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 20X2
Sales revenue ......................................................................................................... $195,000
Less: Cost of goods sold ....................................................................................... 132,000
Gross margin .......................................................................................................... $ 63,000
EXERCISE 3-32 (20 MINUTES)

1. Raw material:

Beginning inventory $ 71,000

Add: Purchases ?
Deduct: Raw material used 326,000
Ending inventory $ 81,000

Therefore, purchases for the year were $336,000

2. Direct labor:

Total manufacturing cost $686,000

Deduct: Direct material 326,000
Direct labor and manufacturing overhead 360,000

Direct labor + manufacturing overhead = $360,000

Direct labor + (60%) (direct labor) = $360,000
(160%) (direct labor) = $360,000

Direct labor = $360,000

1.6

Direct labor = $225,000

3. Cost of goods manufactured:

Work in process, beginning inventory .................................................. $ 80,000

Add: Total manufacturing costs ............................................................ 686,000
Deduct: Cost of goods manufactured ................................................... ?
Work in process, ending inventory ....................................................... $ 30,000

Therefore, cost of goods manufactured was ....................................... $736,000

EXERCISE 3-32 (CONTINUED)

4. Cost of goods sold:

Finished goods, beginning inventory $ 90,000

Add: Cost of goods manufactured 736,000
Cost of goods available for sale $826,000
Deduct: Cost of goods sold ?
Finished goods, ending inventory $110,000

Therefore, cost of goods sold was $716,000

EXERCISE 3-33 (20 MINUTES)

Calculation of proration amounts:

Calculation of
Account Amount Percentage Percentage
Work in Process $ 35,250 25% 35,250  $141,000
Finished Goods 49,350 35% 49,350  $141,000
Cost of Goods Sold 56,400 40% 56,400  $141,000
Total $141,000 100%

Underapplied Amount Added

Account Overhead x Percentage to Account
Work in Process $16,000* x 25% $4,000
Finished Goods 16,000 x 35% 5,600
Cost of Goods Sold 16,000 x 40% 6,400

*Underapplied overhead = actual overhead – applied overhead

$16,000 = $157,000 – $141,000

Journal entry:

Work-in-Process Inventory 4,000

Finished-Goods Inventory 5,600
Cost of Goods Sold 6,400
Manufacturing Overhead 16,000
EXERCISE 3-34 (15 MINUTES)

NOTE: Actual selling and administrative expense, although given in the exercise, is
irrelevant to the solution.

$997,500
1. Predetermined overheadrate   $13.30 per hour
75,000 hours

2. To compute actual manufacturing overhead:

Depreciation $ 231,000
Property taxes 21,000
Indirect labor 82,000
Supervisory salaries 200,000
Utilities 59,000
Insurance 30,000
Rental of space 300,000
Indirect material:
Beginning inventory, January 1 ........................................................ $ 48,000
Add: Purchases ..................................................................................
94,000
Indirect material available for use .....................................................
$142,000
Deduct: Ending inventory, December 31 .......................................... 63,000
Indirect material used ........................................................................ 79,000
Actual manufacturing overhead ............................................................... $1,002,000

actual applied
Overapplied = manufacturing – manufacturing
overhead overhead overhead

= $1,002,000 – ($13.3080,000*) = $62,000

*Actual direct-labor hours.

3. Manufacturing Overhead ........................................................... 62,000

Cost of Goods Sold .......................................................... 62,000
EXERCISE 3-37 (10 MINUTES)

Budgeted overhead rate = budgeted overhead / budgeted direct professional labor

160% = 400,000 euros / 250,000 euros

Contract to redecorate mayor’s offices:

Direct material ............................................................................................................ 3,500 euros

Direct professional labor ........................................................................................... 6,000 euros
Overhead (160%  6,000 euros) ................................................................................ 9,600 euros
Total contract cost ..................................................................................................... 19,100 euros