Accounting -V
Santosh_2102
wEEK4V.docxRunning Head: FINANCIAL ACCOUNTING 1
FINANCIAL ACCOUNTING 13
Title: FINANCIAL ACCOUNTING
Student’s Name:
Institution:
Exercise 3-23
For each of the following companies, indicate whether job order or process costing is more appropriate
|
Manufacturer of swimming pool chemicals |
Process costing |
|
Manufacturer of custom hot tubs and spas |
Job posting |
|
Architectural firm |
Job posting |
|
Manufacturer of ceramic tile |
Process costing |
|
Producer of yogurt |
Process costing |
|
Manufacturer of custom tool sheds |
Job posting |
|
Manufacturer of papers clips |
Process costing |
|
Engineering consulting firm |
Job posting |
|
Manufacturer of balloons |
Process costing |
|
Manufacturer of custom emergency rescue vehicles |
Process costing |
Exercise 3-27
Prime cost= direct labor cost + direct material cost
Total manufacturing cost= Prime cost+ Manufacturing overhead cost
Cost of goods manufactured= Total manufacturing cost + Beginning WIP Inventory- Ending WIP Inventory
Cost of goods sold= Cost of goods manufactured + Beginning Finished Goods Inventory- Ending Finished Goods Inventory
Direct materials used for manufacturing of finished goods
|
Raw materials inventory, January 1 |
$133,000 |
|
Add: Raw Materials purchase during January |
$190,000 |
|
Total raw materials inventory available for consumption |
$323,000 |
|
Less: Raw materials inventory, January 31 |
$124,000 |
|
Raw materials used or consumed during January |
$199,000 |
The prime cost, total manufacturing cost, the cost of goods manufactured for January
|
Direct raw materials cost (working Note 1) |
|
$199,000 |
|
Direct labor Cost |
|
$300,000 |
|
Prime cost for January |
|
$499,000 |
|
Applied manufactured overhead (60% of direct labor cost) |
|
$180,000 |
|
Total manufacturing costs for January |
|
$679,000 |
|
Add: Work in process inventory, January 1 |
|
$233,000 |
|
Less: Work in process inventory, January 31 |
|
$251,000 |
|
Cost of goods manufactured for January |
|
$661,000 |
Cost of goods sold for January
|
Finished goods inventory, January 1 |
$125,000 |
|
Add: Cost of goods manufactured for January |
$661,000 |
|
Total cost of goods available for sale |
$786,000 |
|
Less: Finished goods inventory, January 31 |
$117,000 |
|
Cost of goods sold for January |
$669,000 |
The balance in the manufacturing overhead account on January 31
Applied manufacturing overhead cost= 60% of the direct labor cost= 60% × $300,000= $180,000 (Credit)
Actual manufacturing overhead cost= $170,000 (Debit)
Balance in the manufacturing overhead account on January 31= $10,000 (Credit)
Problem 3-42
1. Prepare Twisto Pretzel Company’s schedule of cost of goods manufactured for 20×1.
2. Prepare the company’s schedule of cost of goods sold for 20×1. The company closes overapplied or underapplied overhead into cost of goods sold.
3. Prepare the company’s income statement for 20×1.
Twisto Pretzel Company
Schedule of cost of Goods Manufactured
For the year of 20×1
|
Particulars |
Amount $ |
Amount $ |
|
Direct Materials: |
|
|
|
Raw material inventory on 31.12. ×0 |
10,100 |
|
|
Add: Purchase of raw material |
39,000 |
|
|
Raw material available for use |
49,100 |
|
|
Deduct: Raw material inventory 31.12. ×1 |
11,000 |
|
|
Raw material used |
|
38,100 |
|
Direct labour |
|
79,000 |
|
|
|
|
|
Manufacturing overhead: |
|
|
|
Insurance on factory and equipment |
3,600 |
|
|
Indirect material used |
4,900 |
|
|
Depreciation on factory equipment |
2,100 |
|
|
Property taxes of factory |
2,400 |
|
|
Utilities for factory |
6,000 |
|
|
Indirect labor |
29,000 |
|
|
Depreciation on factory building |
3,800 |
|
|
Rental for warehouse to store raw material |
3,100 |
|
|
Total actual manufacturing overhead |
54,900 |
|
|
Add: over applied overhead |
3,100 |
|
|
Overheads applied to work in process |
|
58,000 |
|
Total manufacturing |
|
175,000 |
|
Add: Work in process inventory on 31.12. ×0 |
|
8,100 |
|
|
|
|
|
Subtotal |
|
183,200 |
|
Deduct: work in process inventory on 31.12. ×1 |
|
8,300 |
|
Cost of goods manufactured |
|
174,900 |
Twisto Pretzel Company
Schedule of cost of goods sold
For the year 20×1
|
Particulars |
Amounts $ |
|
Finished goods inventory on 31.12. ×0 |
14,000 |
|
Add: cost of goods manufactured |
174,000 |
|
Costs of goods available for sale |
188,900 |
|
Deduct: finished goods inventory on 31.12. ×1 |
15,400 |
|
Cost of goods sold |
173,500 |
|
Deduct: Over applied manufacturing overhead |
3,100 |
|
Cost of goods sold(adjust for overapplied overhead) |
170,400 |
Twisto Pretzel Company
Income statement
For the year ended December 31, 20×1
|
Particulars |
Amount $ |
Amount $ |
|
Sales revenue |
|
205,800 |
|
Deduct: cost of goods sold |
|
170,400 |
|
Gross Margin |
|
35,400 |
|
Deduct: Selling and administrative overheads |
|
|
|
Selling and administrative overheads |
13,800 |
|
|
Utilities for selling and administrative offices |
2,500 |
|
|
Other selling and administrative expenses |
4,000 |
|
|
Depreciation on card used by sales personnel |
1,200 |
|
|
Rental of space for company president’s office |
1,700 |
|
|
|
|
23,200 |
|
Income before taxes |
|
12,200 |
|
Deduct: income tax expenses |
|
5,100 |
|
Net Income |
|
7,100 |
Problem 3-50
1. Prepare Huron’s schedule of cost of goods manufacturing for 20×2.
2. Prepare the company’s schedule of cost of goods sold for 20×2. The company closes overapplied or underapplied overhead into cost of goods sold.
3. Prepare the company’s income statement for 20×2.
Huron Corporation
Schedule of cost of goods manufactured
For the year ended December 31,20×2
|
Particulars |
Amount $ |
Amounts $ |
|
Direct material |
|
|
|
Raw material inventory, January 1 |
89,000 |
|
|
Add: Purchase of raw material |
731,000 |
|
|
Raw material available |
820,000 |
|
|
Less: raw material inventory, December 31 |
59,000 |
|
|
Raw material used |
|
761,000 |
|
Direct labor |
|
474,000 |
|
Manufacturing overhead: |
|
|
|
Indirect material |
45,000 |
|
|
Indirect labor |
150,000 |
|
|
Depreciation of factory building |
125,000 |
|
|
Depreciation on factory equipment |
60,000 |
|
|
Insurance of factory equipment |
40,000 |
|
|
Utilities for factory |
70,000 |
|
|
Property taxes on factory |
90,000 |
|
|
Total manufacturing overhead |
|
580,000 |
|
Less: under applied manufacturing overhead ($580,000-$577,500) |
|
2,500 |
|
Total manufacturing costs |
|
1,812,500 |
|
Add: work in progress inventory, January 1 |
|
0 |
|
Less: work in progress inventory, December |
|
40,000 |
|
Cost of goods manufactured |
|
1,772,500 |
Huron Corporation
Schedule of cost goods sold
For the year ended December 31, 20×2
|
Particular |
Amounts |
|
Finished goods inventory, January 1 |
35,000 |
|
Add: cost of goods manufactured |
1,772,500 |
|
Cost of goods available for sale |
1,807,500 |
|
Less: finished goods inventory, December 31 |
40,000 |
|
Cost of goods sold |
1,767,500 |
|
Add: under applied manufacturing overhead ($580,000-$577,500) |
2,500 |
|
Cost of goods sold (adjusted for under applied overhead) |
1,770,000 |
Huron Corporation
Income statement
For the year ended December 31, 20×2
|
Particulars |
Amounts $ |
|
sales revenue |
2,105,000 |
|
Less: cost of goods sold |
1,770,000 |
|
Gross margin |
335,000 |
|
Selling and administrative expenses |
269,000 |
|
Income before taxes |
66,000 |
|
Income tax Expense |
25,000 |
|
Net income |
41,000 |
Huron Corporation
Schedule of cost of goods manufactured
For the year ended December 31,20×2
|
Particulars |
Amount $ |
Amounts $ |
|
Direct material |
|
|
|
Raw material inventory, January 1 |
89,000 |
|
|
Add: Purchase of raw material |
731,000 |
|
|
Raw material available |
820,000 |
|
|
Less: raw material inventory, December 31 |
59,000 |
|
|
Raw material used |
|
761,000 |
|
Direct labor |
|
474,000 |
|
Manufacturing overhead: |
|
|
|
Indirect material |
45,000 |
|
|
Indirect labor |
150,000 |
|
|
Depreciation of factory building |
125,000 |
|
|
Depreciation on factory equipment |
60,000 |
|
|
Insurance of factory equipment |
40,000 |
|
|
Utilities for factory |
78,000 |
|
|
Property taxes on factory |
90,000 |
|
|
Total manufacturing overhead |
|
588,000 |
|
Less: under applied manufacturing overhead ($588,000-$580,000) |
|
8,000 |
|
Total manufacturing costs |
|
1,815,000 |
|
Add: work in progress inventory, January 1 |
|
0 |
|
Less: work in progress inventory, December |
|
40,000 |
|
Cost of goods manufactured |
|
1,775,000 |
Huron Corporation
Schedule of cost goods sold
For the year ended December 31, 20×2
|
Particular |
Amounts |
|
Finished goods inventory, January 1 |
35,000 |
|
Add: cost of goods manufactured |
1,775,000 |
|
Cost of goods available for sale |
1,810,000 |
|
Less: finished goods inventory, December 31 |
40,000 |
|
Cost of goods sold |
1,770,000 |
|
Add: under applied manufacturing overhead ($580,000-$577,500) |
8,000 |
|
Cost of goods sold (adjusted for under applied overhead) |
1,762,000 |
Huron Corporation
Income statement
For the year ended December 31, 20×2
|
Particulars |
Amounts $ |
|
sales revenue |
2,115,000 |
|
Less: cost of goods sold |
1,762,000 |
|
Gross margin |
353,000 |
|
Selling and administrative expenses |
269,000 |
|
Income before taxes |
84,000 |
|
Income tax Expense |
25,000 |
|
Net income |
59,000 |
References
Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.
Libby, R. (2017). Accounting and human information processing. In The Routledge Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge.
Smith, M. (2017). Research methods in accounting. Sage.
