Chapter 5 Homework

Developing and Using a Predetermined Overhead Rate
Assume that the following predictions were made for 2009 for one of the plants of Milliken & Company:

Total manufacturing overhead for the year	$44,000,000
Total machine hours for the year	2,000,000

Actual results for February 2009 were as follows:

Manufacturing overhead	$5,480,000
Machine hours	310,000

(a) Determine the 2009 predetermined overhead rate per machine hour.

(b) Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February.

(c) As of February 1, actual overhead was underapplied by $500,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February.

Analyzing Activity in Inventory Accounts
Selected data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:

Raw materials used	$300,000
Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs)	681,000
Cost of goods available for sale	826,000
Selling and general expenses	30,000

	Inventories
	Beginning	Ending
Raw materials	$70,000	$80,000
Work-in-process	85,000	30,000
Finished goods	90,000	110,000

Determine each of the following:

(a) Cost of raw materials purchased

(b) Direct labor costs charged to production

(d) Cost of goods sold

Minot Processing Company manufactures one product on a continuous basis in two departments, Processing and Finishing. All materials are added at the beginning of work on the product in the Processing Department. During December 2009, the following events occurred in the Processing Department:

Units started	16,000 units
Units completed and transferred to Finishing Department	15,000 units

Costs assigned to processing: Raw materials (one unit of raw materials for each unit of product started)	$142,900
Manufacturing supplies used	18,000
Direct labor costs incurred	51,000
Supervisors' salaries	12,000
Other production labor costs	14,000
Depreciation on equipment	6,000
Other production costs	18,000

Additional information follows:

Minot uses weighted average costing and applies manufacturing overhead to Work-in-Process at the rate of 100 percent of direct labor cost.

Ending inventory in the Processing Department consists of 3,000 units that are one-third converted.

Beginning inventory contained 2,000 units, one-half converted, with a cost of $41,500 ($29,900 for materials and $11,600 for conversion).

(a) Prepare a cost of production report for the Processing Department for December.

Minot Processing Company: Processing Department Cost of Production Report For the Month Ending December 31, 2009
Summary of units in process:
Beginning	Answer
Units started	Answer
In process	Answer
Completed	Answer
Ending	Answer
Equivalent units in process:		Materials	Conversion	Total
Units completed		Answer	Answer
Plus equivalent units in ending inventory		Answer	Answer
Equivalent units in process		Answer	Answer
Total cost to be accounted for and cost per equivalent unit in process:
Beginning work-in-process		$Answer	$Answer	$Answer
Current costs		Answer	Answer	Answer
Total cost in process		$Answer	$Answer	$Answer
Equivalent units in process		÷Answer	÷Answer
Cost per equivalent unit in process		$Answer	$Answer	$Answer
Accounting for total costs:
Transferred out				$Answer
Ending work-in-process:
Materials			$Answer
Conversion			Answer	Answer
Total cost accounted for				$Answer

(b) Prepare an analysis of all changes in Work-in-Process.

Work-in-process:
Beginning		$Answer
Current manufacturing costs:
Direct materials	$Answer
Direct labor	Answer
Applied overhead	Answer	Answer
Total		$Answer
Cost of goods manufactured		Answer
Ending		$Answer

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