Accounting 2

. EA1 LO 4.1 Little Things manufactures toys. For each item listed, identify whether it is a product cost, a period cost, or not an expense.

A. internet provider services

B. material expense

C. raw materials inventory

D. production equipment rental

E. showroom rental

F. factory employee salary

G. Human Resource Director salary

EA  2. 

LO 4.2 Table 4.3  shows a list of expenses involved in the production of custom, professional lacrosse sticks.

A. For each item listed, state whether the cost should be applied to manufacturing or sales and administration.

B. If the cost is a manufacturing cost, state whether it is direct materials, direct labor, or manufacturing overhead.

C. If the cost is a manufacturing overhead cost, state whether it is indirect materials, indirect labor, or another type of manufacturing overhead.

Expenses Involved in Lacrosse Stick Production

Lacrosse Stick Production Costs	Manufacturing or Sales & Administration Cost?	If Manufacturing: Direct Materials, Direct Labor, or Overhead?	If Overhead: Indirect Materials, Indirect Labor, or Other?
Carbon, fiberglass
Administrative building rent
Accountant salary
Factory building depreciation
Strings for the pocket
Advertising
Production supervisor salary
Paint for sticks
Research and development costs
Wages of person who strings the sticks
Cutting machine depreciation
Human resources salaries
Factory maintenance

Table  4.3

EA  5. 

LO 4.3 Sterling’s records show the work in process inventory had a beginning balance of $4,000 and an ending balance of $3,000. How much direct labor was incurred if the records also show:

EA  6. 

LO 4.3 Logo Gear purchased $2,250 worth of merchandise during the month, and its monthly income statement shows cost of goods sold of $2,000. What was the beginning inventory if the ending inventory was $1,000?

EA  7. 

LO 4.4 A company estimates its manufacturing overhead will be $750,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases?

A. Budgeted direct labor hours: 60,000

B. Budgeted direct labor expense: $1,500,000

C. Estimated machine hours: 100,000

EA  9. 

LO 4.4 A new company started production. Job 10 was completed, and Job 20 remains in production. Here is the information from job cost sheets from their first and only jobs so far:

Using the information provided,

A. What is the balance in work in process?

B. What is the balance in the finished goods inventory?

C. If manufacturing overhead is applied on the basis of direct labor hours, what is the predetermined overhead rate?

EA  14. 

LO 4.7 A company’s individual job sheets show these costs:

Overhead is applied at 1.25 times the direct labor cost. Use the data on the cost sheets to perform these tasks:

A. Apply overhead to each of the jobs.

B. Prepare an entry to record the assignment of direct materials to work in process.

C. Prepare an entry to record the assignment of direct labor to work in process.

D. Prepare an entry to record the assignment of manufacturing overhead to work in process.