Scribd
Upload
36 views

Exercises

The document discusses cost accounting problems involving manufacturing overhead, cost of goods manufactured, cost of goods sold, net income, and the impact of changes in production volume. It provides the calculations and accounting entries for these problems across multiple periods.

Uploaded by

vanessa
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
36 views

Exercises

The document discusses cost accounting problems involving manufacturing overhead, cost of goods manufactured, cost of goods sold, net income, and the impact of changes in production volume. It provides the calculations and accounting entries for these problems across multiple periods.

Uploaded by

vanessa
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Exercises Chapter 2

PROBLEM 2-438

Solution:

1. Manufacturing overhead:
Indirect labor………………………………. $109,000
Building depreciation ($80,000 x 75%).. 60,000
Other factory costs……………………….. 344,000
Total……………………………………... $513,000

2. Cost of goods manufactured:


Direct material:
Raw-material inventory, Jan. 1……………… $ 15,800
Add: Purchases of raw material…………….. 175,000
Raw material available for use………………. $190,800
Deduct: Raw-material inventory, Dec. 31…. 18,200
Raw material used…………………………….. $172,600
Direct labor………………………………………….. 254,000
Manufacturing overhead………………………….. 513,000
Total manufacturing costs……………………….. $939,600
Add: Work-in-process inventory, Jan. 1………. 35,700
Subtotal………………………………………….. $975,300
Deduct: Work-in-process inventory, Dec. 31…. 62,100
Cost of goods manufactured…………………….. $913,200

3. Cost of goods sold:


Finished-goods inventory, Jan. 1…………….. $ 111,100
Add: Cost of goods manufactured…………… 913,200
Cost of goods available for sale………………. $1,024,300
Deduct: Finished-goods inventory, Dec. 31… 97,900
Cost of goods sold………………………………. $ 926,400

4. Net income:
Sales revenue…………………………………….. $1,495,000
Less: Cost of goods sold………………………. 926,400
Gross margin……………………………………... $ 568,600
Selling and administrative expenses:
Salaries………………………………………... $133,000
Building depreciation ($80,000 x 25%)…... 20,000
Other…………………………………………… 195,000 348,000
Income before taxes…………………………….. $ 220,600
Income tax expense ($220,600 x 30%)……….. 66,180
Net income………………………………………... $ 154,420

5. The company sold 11,500 units during the year ($1,495,000 ÷ $130). Since 160 of
the units came from finished-goods inventory (1,350 – 1,190), the company would
have manufactured 11,340 units (11,500 – 160).
PROBLEM 2-40

Solution:

1. Fixed manufacturing overhead per unit:


$600,000  24,000 units produced = $25

Average unit manufacturing cost:


Direct material……………………….. $ 20
Direct labor…………………………… 37
Variable manufacturing overhead.. 48
Fixed manufacturing overhead…… 25
Average unit cost……………….. $130

Production……………………………. 24,000 units


Sales…………………………………… 20,000 units
Ending finished-goods inventory… 4,000 units

Cost of December 31 finished-goods inventory:


4,000 units x $130 = $520,000
2. Net income:
Sales revenue (20,000 units x $185)………… $3,700,000
Cost of goods sold (20,000 units x $130)….. 2,600,000
Gross margin……………………………………. $1,100,000
Selling and administrative expenses……….. 860,000
Income before taxes…………………………… $ 240,000
Income tax expense ($240,000 x 30%)……… 72,000
Net income………………………………………. $ 168,000

3. (a) No change. Direct labor is a variable cost, and the cost per unit will remain
constant.

(b) No change. Despite the decrease in the number of units produced, this is a
fixed cost, which remains the same in total.

(c) No change. Selling and administrative costs move more closely with
changes in sales than with units produced. Additionally, this is a fixed cost.

(d) Increase. The average unit cost of production will change because of the
per-unit fixed manufacturing overhead. A reduced production volume will
be divided into the fixed dollar amount, which increases the cost per unit.

You might also like