Acc 220 chap 3

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ch 3 Excel

Integrated Example Ch.3 Variance is material
Job Order Costing Variance must be capitalized @ reporting date for GAAP
M WIP FG Operating 7 days a week
A. Overhead Budget for the Year: Y = a + bX Beginning $8,000 $11,000 $14,000
Variable Overhead per Direct Labor [DL] Hrs. $ 2.75 b Est Additions $45,000 $92,500 $27,000 June May
Estimated DL hrs. 42,000 X Est Used/completed/sold ($43,000) ($27,000) ($27,000) Actual overhead spending $ 1,085,000 $ 1,000,200
Variable $ 115,500 bX Est Ending $10,000 $76,500 $14,000 Applied overhead $ 962,000 $ 933,000
Fixed Overhead $ 94,500 a Est Under applied $ 123,000 $ 67,200
$ 210,000 $ 210,000 Y=a+bX Portion of month in inventory 30/30 18/31
42,000 POHR $ 5.00 per DL Hr. 100.0% 58.1%
$5.00 Dr/(Cr) Dr/(Cr)
Dr/(Cr) Dr/(Cr) Income statement Ending inventory/days 48.00
Contra acct. or Inventory Overhead spending in CoGS
Liability Acct. Materials WIP FG CoGS CoGS Selling & Admin Exp Balance in inventory @ June end $ 162,019
May ending Inventory [Beginning fo June] $8,000 $11,000 $14,000 Period
June Ending Inventory before adjustment $10,000 $76,500 $14,000
Material in production
June Activity Beginning $8,000
1 Purchase Materials A/P ($45,000) $45,000 Added $45,000
Ending ($10,000)
2 Issued Materials from inventory $43,000 materials from inventory used in period Cost including allocation of Fixed Cost
Materials for products ($43,000) $40,000 ($3,000) less materials to overhead Variable Cost: Direct Cost [Direct Labor & Materials] +
Indirect materials $3,000 $40,000 Materials used in production Variable overhead [within a relevant range]
Marginal Cost: the out-of-packet costs to produce [sell] next unit
3 Payroll for Period Total Manufacturing costs
Sales Salaries $2,000 Materials $40,000 Manufacturing Overhead Control
Direct labor charges to jobs [3500 hrs.@$10/hr] Wage payable ($49,000) $35,000 DL SG&A DL $35,000 Accounts are resident in CoGS
Indirect manufacturing labor $12,000 Applied overhead $17,500 Spending Accounts
Mfg.OH $92,500 Salary Expense 66,000
4 Other Manufacturing overhead spending Wage Expense 78,000
Utilities ($1,700) $1,700 Production Direct labor 215,000
Accum. Depreciation ($2,900) $2,900 Fringe benefit expense 74,000
$3,000
Factory Property taxes payable ($1,000) $1,000 $12,000 Commission expense - 0 $ 710,000 Budget/estimated OH Spending
$1,700 Advertising expense 750 35500 Budget/estimated Dl Hrs.
5 Apply overhead to jobs using POHR 3500 hrs $17,500 ($17,500) $2,900 Building rent expense 21,000 $ 20.00 POHR
$ 5.00 $1,000 Equipment lease expense 5,800 34,000 Acutal DL Hrs.
6 Incur Selling expense-Advertising $3,500 $750 $20,600 Office supply expense 2,300 $680,000 Applied Overhead
Contract labor Expense 34,000
7 Completed Work from WIP ($27,000) $27,000 Beginning $11,000 WIP Travel/entertainment exp. 2,000
added $92,500 Professional services 3,200
Ending ($76,500) WIP Bank charges/fees - 0
To FG $27,000 Cost of Goods manufactured Depreciation expense 144,000
Miscellaneous expense 3,950
8 Sold FG to Customer ($27,000) $27,000 Beginning $14,000 Total 650,000 this had been debited to CoGS
added $27,000 inventory did NOT change
Ending ($14,000) usually beginning ≠ ending Applied overhead (680,000) this was credited thru Applied OH acct. to CoGS
To CoGS $27,000 Cost of Goods Sold [CoGS]
Net Effect (30,000) decrease CoGS
B 1 End of period adjustment for over/under applied overhead WIP FG $3,100 ←Sum under applied overhead +Q51+P51
$s applied OH in Inventory [less than 1 Mo. In Inv.] GIVEN Memo $10,000 $1,500 MOH remaing in Inv. % Underapplied ($17,500) $20,600 17.7% $3,100
Add 17.7% $1,771 $266 ($2,037) Entry 17.7% Applied Spending under -17.7%
Overhead is applied on labor Hrs Inventory up 65.71% applied
Dr. Inventory= Under applied [inventory too low, profit too low] 87% 13% $3,100 WIP FG 35000 17500
(Cr.) Inventory= over applied [Inventory too high, profit too high] $10,000 $1,500 $11,500 3500 3500
If over applied Cr. Inventory AND dr. CoGS +11500/17500 = 65.71% of a month 10 5
+66% * $3100 $2,037
B 2 End of period adjustment for over/under applied overhead WIP FG $7,264 ←Sum under applied overhead Integrated Example
$s applied OH in Inventory [more than 1 Mo. In Inv.] Memo $8,000 $32,000 çççççMore than one month
($728) $ (2,914) $3,642 Entry
Overhead is applied on labor Hrs Inventory up
Dr. Inventory= Under applied [inventory too low, profit too low]
(Cr.) Inventory= over applied [Inventory too high, profit too high]
If over applied Cr. Inventory AND dr. CoGS $40,000 Applied in inventory
$17,500 Applied this Mo
$16,000 Applied prior Mo
$16,500 Applied 2nd Mo. Prior
Over/(under applied) Adjustment to ending inventory
# mo Applied in inventory 1.00 $17,500 Applied this Mo ($3,100) $ (3,100) 17.7% under applied
1.00 $16,000 Applied prior Mo $600 $ 600 given
0.39 $6,500 Applied 2nd Mo. Prior ($2,900) $ (1,142) given
2.39 $ 40,000 ($5,400) $ (3,642)
$8,000 $32,000 $40,000
20.0% 80.0% 100.0%
$ (728) $ (2,914) $ (3,642)

Ch 3 HW

Chapter 3
HW---ACC220---HCT
Assume over/under applies to ending inventory
hours= Basis for POHR
Capacity/hrs. 10,500
Budget/Hrs 9,600 basis for POHR
Budgeted overhead spending $s 82,560 8.6
Actual/Hrs 9,300
Ending is before over/under applied Raw Materials WIP FG Total Overhead
Beginning Inventory $s 125,000 44,000 189,000 358,000
Total Ending Inventory $s 131,000 39,000 175,000 345,000
Overhead in inventory 11,000 69,840 80,840
Actual Period Spending
Purchased material to Raw Matls. 175,000 Note to get addition to WIP for materials
Direct labor spending 18,000 + Beginning + adds to Materials - ending materials = materials into WIP [ WIP additions for materials]
Overhead spending 89,000
[A] What is POHR & what is over/under applied using Actual spending, actual production & budget hrs. based POHR
POHR = $8.60
Applied overhead =
Overapplied or either over OR under not both
Underapplied
[B] Actual Cost of goods manufactured using budget overhead rate as POHR before applying over/under applied overhead
From WIP to FG
Show calculations
COG Manufactured Look up the formulae; see PPT and/or excel
[C]Based on Ending inventory $s, inventory is to be adjusted, show adjustment to inventory for over /under applied overhead using budgeted POHR
Show calculations WIP FG adjustment only overhead
Ending total 39,000 175,000
Ending Overhead 11,000 69,840 equals exactly one month of inventory combined
Adjustment
Adjusted Ending
determine what portion of the month applied is in inventory at PE
then how much is in WIP how muck in FG
[D] What is Cost of goods manufactured using Capacity overhead rate as POHR before applying over/under applied overhead
Show calculations
POHR =
Applied overhead =
Overapplied or either over OR under not both
Underapplied
COG Manufactured

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