Marc Corp. has a job-order costing system.
The following debits (credits) appeared in
the Work in Process account for the month of May:
May 1 Balance $10,000
May 31 Direct materials $60,000
May 31 Direct labor $40,000
May 31 Manufacturing overhead $32,000
$(120,000
May 31 To finished goods )
Marc applies overhead to jobs at a predetermined rate of 80% of direct labor cost.
Job No. 23, the only job still in process at the end of May has been charged with
direct labor of $5,000. The amount of direct materials charged to Job No. 23 was:
A) $6,250
B) $7,500
C) $13,000
D) $17,000
Solution:
Work in Process
Bal. 10,000 FG 120,000
DM 60,000
DL 40,000
Applied MOH 32,000
Bal. 22,000
Ending Balance of Work in Process....................... $22,000
Less:
Direct labor ....................................................... $5,00
0
Manufacturing overhead (80% × $5,000)......... 4,000 9,000
Direct materials charged to Job No. 23.................. $13,000
11-12
Use the following to answer questions 125-126:
Hamilton Company uses job-order costing. Manufacturing overhead is applied using a
predetermined rate of 150% of direct labor cost. Any over- or underapplied
manufacturing overhead is closed to the Cost of Goods Sold account at the end of each
month. Additional information is available as follows:
Job 101 was the only job in process at January 31. The job cost sheet for this job
contained the following costs at the beginning of the month:
$4,00
Direct materials ................................................................ 0
$2,00
Direct labor ....................................................................... 0
$3,00
Applied manufacturing overhead ............................... 0
Jobs 102, 103, and 104 were started during February.
Direct materials requisitions for February totaled $26,000.
Direct labor cost of $20,000 was incurred for February.
Actual manufacturing overhead was $32,000 for February.
The only job still in process at February 28 was Job 104, with costs of $2,800
for direct materials and $1,800 for direct labor.
125. The cost of goods manufactured for February was:
A) $77,700
B) $78,000
C) $79,700
D) $85,000
Solution:
Raw materials used in production..................................................... $26,000
Direct labor........................................................................................ 20,000
Manufacturing overhead applied to work in process
(150% × 20,000)
........................................................................................................ 30,000
Total manufacturing costs................................................................. 76,000
lOMoAR cPSD
Add: Work in process, beginning*.................................................... 9,000
85,000
Deduct: Work in process, ending**.................................................. 7,300
Cost of goods manufactured.............................................................. $77,700
*Beginning Work in Process (Job 104):
Direct materials
............................................ $4,000
Direct labor
............................................ 2,000
Manufacturing overhead
............................................ 3,000
Work in process, May 1............ $9,000
**Ending Work in Process (Job 104):
Direct materials
................................................................... $2,800
Direct labor
................................................................... 1,800
Manufacturing overhead (150% × 1,800)
................................................................... 2,700
Total ending work in process.......................... $7,300
lOMoAR cPSD| 3742721
18. Ormandy Company uses a FIFO process costing system. The company had 5,000 units that
were 60 percent complete as to conversion costs at the beginning of the month. The company
started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that
were 35 percent complete as to conversion costs. What are equivalent units for material, if
material is added at the beginning of the process?
a. 18,000
b. 22,000
c. 25,000
d. 27,000
ANS: B
The material is added at the beginning of the process; therefore there are 22,000 equivalent units of
material.
18.Bernstein Company uses a FIFO process costing system. The company had 6,000 units that were 75
percent complete as to conversion costs at the beginning of the month. The company started 25,000
units this period and had 8,000 units in ending Work in Process Inventory that were 40 percent
complete as to conversion costs. What are equivalent units for material, if material is added at the
beginning of the process?
a. 18,500
b. 25,000
c. 26,500
d. 31,000
ANS: B
The material is added at the beginning of the process; therefore there are 25,000 equivalent units
17.Lincoln Company had beginning Work in Process Inventory of 5,000 units that were 40 percent
complete as to conversion costs. Lincoln Company started and completed 42,000 units this period
and had ending Work in Process Inventory of 12,000 units. How many units were started this
period?
a. 42,000
b. 47,000
c. 54,000
d. 59,000
ANS: C
Beginning Work in Process 5,000
Add: Units Started 54,000
Deduct: Units Transferred Out ( 47,000)
Ending Work in Process 12,000
17. Douglas Company had beginning Work in Process Inventory of 6,000 units that were 45
percent complete as to conversion costs. Douglas Company started and completed 46,000 units
this period and had ending Work in Process Inventory of 11,000 units. How many units were
started this period?
a. 46,000
b. 52,000
c. 57,000
d. 63,000
ANS: C
Beginning Work in Process 6,000
Add: Units Started 57,000
Deduct: Units Transferred Out ( 52,000)
Ending Work in Process 11,000
16. Streete Company uses a weighted average process costing system. Material is added at the start of
production. Streete Company started 13,000 units into production and had 4,500 units in process at the start
of the period that were 60 percent complete as to conversion costs. If Streete Company transferred out
11,750 units, how many units were in ending Work in Process Inventory?
a. 1,250
b. 3,000
c. 3,500
d. 5,750
ANS: D
Beginning Work in Process 4,500
Add: Units Started 13,000
Deduct: Units Transferred Out ( 11,750)
Ending Work in Process 5,750
PTS: 1 DIF: Easy OBJ: 6-2 NAT: AACSB: Analytical Skills
LOC: AICPA Functional Competencies: Measurement, Reporting
16.Roache Company uses a weighted average process costing system. Material is added at the start of
production. Roache Company started 14,000 units into production and had 5,000 units in process at the start
of the period that were 75 percent complete as to conversion costs. If Roache Company transferred out
12,250 units, how many units were in ending Work in Process Inventory?
a. 1,750
b. 3,000
c. 5,500
d. 6,750
ANS: D
Beginning Work in Process 5,000
Add: Units Started 14,000
Deduct: Units Transferred Out ( 12,250)
Ending Work in Process 6,750
19-20 Guthrie Corporation
The following information is available for Guthrie Corporation for the current year:
Beginning Work in Process Costs of Beginning Work in Process:
(75% complete) 14,500 units Material $25,100
Started 75,000 units Conversion 50,000
Ending Work in Process Current Costs:
(60% complete) 16,000 units Material $120,000
Abnormal spoilage 2,500 units Conversion 300,000
Normal spoilage 5,000 units
(continuous)
Transferred out 66,000 units
All materials are added at the start of production
Refer to Guthrie Corporation. Assume that the cost per EUP for material and conversion are
$1.75 and $4.55, respectively. What is the cost assigned to ending Work in Process?
a. $100,800
b. $87,430
c. $103,180
d. $71,680
ANS: D
Equivalent Cost per
Units Equivalent Unit Total
16,000 $1.75 $28,000
9,600 $4.55 $43,680
$71,680
114. Refer to Guthrie Corporation. Assume that the FIFO EUP cost for material and conversion are $1.50
and $4.75, respectively. Using FIFO what is the total cost assigned to the units transferred out?
a. $414,194
b. $339,094
c. $445,444
d. $396,975
ANS: A
Transferred Out Units: FIFO Equiv Cost per Total
Units Equiv Unit
Beginning Work in Process 75,100
+ Completion of Beginning Inventory (14,500 * 25%) 3,625 4.75 17,219
+Units Started and Completed 51,500 6.25 321,875
Equivalent Units of Production 414,194
B 25. Gallagher Corporation. incurred 2,300 direct labor hours to produce 600 units of product. Each
unit should take 4 direct labor hours. Gallagher Corporation applies variable overhead to production on
a direct labor hour basis. The variable overhead efficiency variance
a. will be unfavorable.
b. will be favorable.
c. will depend upon the capacity measure selected to assign overhead to production.
d. is impossible to determine without additional information.
A 28. A company wishing to isolate variances at the point closest to the point of responsibility will determine
its material price variance when
a. material is purchased.
b. material is issued to production.
c. material is used in production.
d. production is completed.
31-36 The Michigan Company has made the following information available for its production facility for the
month of June. Fixed overhead was estimated at 19,000 machine hours for the production cycle. Actual
machine hours for the period were 18,900, which generated 3,900 units.
Material purchased (80,000 pieces) $314,000
Material quantity variance $6,400 U
Machine hours used (18,900 hours)
VOH spending variance $50 U
Actual fixed overhead $60,000
Actual labor cost $40,120
Actual labor hours 5,900
Michigan’s standard costs are as follows:
Direct material 20 pieces @ $4 per piece
Direct labor 1.5 hours @ $6 per hour
Variable overhead
(applied on a machine hour basis) 4.8 hours @ $2.50 per hour
Fixed overhead
(applied on a machine hour basis) 4.8 hours @ $3 per hour
