For Prof. Nicholas Only

Module 2

Critical Thinking: (60 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. When you are ready to submit, click the Module 2 Critical Thinking header on the Assignments page to upload the document.

Note that while there are two options for the Critical Thinking assignment, there is only one rubric. Review the rubric to confirm you are meeting the assignment requirements.

Assignment Choice #1: Classification of Costs Hoover, Inc., uses a job-order coding system. The company’s inventory balances on February 1, the start of its fiscal year, were as follows:

Raw Materials Inventory $69,325

Work in Process Inventory $55,100

Finished Goods Inventory $81,256

During the year, the following transactions were completed: a. Raw materials were purchased on account, $215,221. b. Raw materials were issued from the storeroom for use in production, $198,000 (70% direct and

30% indirect). c. Employee salaries and wages were accrued as follows: direct labor, $243,300; indirect labor,

$98,750; and selling and administrative salaries, $72,340. d. Utility costs were incurred in the factory, $79,233. e. Advertising costs were incurred, $110,600. f. Prepaid insurance expired during the year, $35,000 (80% related to factory operations, and 20%

related to selling and administrative activities). g. Depreciation was recorded, $192,100 (75% related to factory assets, and 25% related to selling

and administrative assets). h. Manufacturing overhead was applied to jobs at the rate of 160% of direct labor cost. i. Goods that cost $720,200 to manufacture according to their job cost sheets were transferred to

the finished goods warehouse.

j. Sales for the year totaled $1,293,300 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $725,825.

Instructions: Submit your assignment as an Excel spreadsheet with each tab labeled by item number. Demonstrate the following:

1. Prepare the journal entries to record the transactions for the year. 2. Prepare the T-accounts for raw materials inventory, work in process inventory, finished goods

inventory, manufacturing overhead, and cost of goods sold. Don’t forget to enter the beginning balances in the inventory accounts.

3. Is manufacturing overhead underapplied or overapplied for the year? Prepare a journal entry to close this balance to cost of goods sold.

Provide your answers in a clearly organized Excel spreadsheet. Check spelling and formatting for readability. Where applicable, written comments must be in accordance with the CSU-Global Guide to Writing and APA Requirements. Be sure to review the Module 2 Critical Thinking grading rubric, which may be accessed through the Course Information page.

Your assignment should meet the following requirements:

 2-3 pages in length, include a title sheet

 Formatted according to CSU-Global standards

 Document your sources

Assignment Choice #2: Costs of Goods Manufactured Statement Denny Corporation, a manufacturing company, produces a single product. The following information has been taken from the company’s production, sales, and cost records for the year just completed:

Production in units 51,000

Direct labor $120,325

Raw materials purchased $325,019

Manufacturing overhead $250,265

Selling and administrative expenses $422,100

Raw Materials, Beginning $62,900

Raw Materials, Ending $45,345

Work in Process, Beginning $52,984

Work in Process, Ending $58,777

Instructions: Prepare the cost of goods manufactured statement. Provide your answers in a clearly organized Excel spreadsheet. Check spelling and formatting for readability. All responses must comply with the CSU- Global Guide to Writing and APA Requirements. Be sure to review the Module 2 Critical Thinking grading rubric, which may be accessed through the Course Information page.

Your assignment should meet the following requirements:

 Formatted according to CSU-Global standards

 2-3 pages in length, including calculations and title sheet