D.- CONTROL Y EVALUACIÓN
7.4 FORTALEZAS Y DEBILIDADES DETECTADAS EN EL LIDERAZGO DEL
(Learning Objectives 3 & 4 & 7)
Black Consulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. Black Consulting uses a job cost system with a predetermined indirect cost allocation rate computed as a percentage of expected direct labour costs.
At the beginning of the year, managing partner Jada Black prepared the following plan, or budget, for the year:
Direct labour hours (professionals) ... 17,000 hours Direct labour costs (professionals) ... $2,669,000 Office rent ... 350,000 Support staff salaries ... 1,194,300 Utilities ... 324,000 Land Resources is inviting several consulting firms to bid for work. Black estimates that this job will require about 220 direct labour hours.
Requirements
1. Compute Black Consulting’s (a) hourly direct labour cost rate and (b) indirect cost allocation rate.
2. Compute the predicted cost of the Land Resources job.
3. If Black wants to earn a profit that equals 50% of the job’s cost, how much should she bid for the Land Resources job?
E3-26A Analyze manufacturing overhead
(Learning Objectives 3 & 5)Freeman Foundry in Mount Forest, Ontario, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following: Manufacturing overhead cost ... $ 600,000 Direct labour cost ... 1,500,000
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At the end of the year, the company had actually incurred the following:
Direct labour cost ... $1,210,000 Depreciation on manufacturing plant and equipment... 480,000 Property taxes on plant ... 20,000 Sales salaries ... 25,000 Delivery drivers’ wages ... 15,000 Plant janitors’ wages ... 10,000 Machine hours ... 55,000 hours
Requirements
1. Compute Freeman’s predetermined manufacturing overhead rate.
2. How much manufacturing overhead was allocated to jobs during the year?
3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much?
4. Were the jobs overcosted or undercosted? By how much?
E3-27A Record manufacturing overhead
(Learning Objectives 5 & 6)Refer to the data in Exercise 3-26A. Freeman’s accountant found an error in the expense records from the year reported. Depreciation on manufacturing plant and equipment was actually $400,000, not the $480,000 originally reported. The unadjusted cost of goods sold balance at year end was $600,000.
Requirements
1. Prepare the journal entry(s) to record manufacturing overhead costs incurred.
2. Prepare the journal entry to record the manufacturing overhead allocated to jobs in production.
3. Use a T-account to determine whether manufacturing overhead is underallocated or overallocated, and by how much.
4. Record the entry to close out the underallocated or overallocated manufacturing overhead.
5. What is the adjusted ending balance of cost of goods sold?
E3-28A determine transactions from T-accounts
(Learning Objective 2 & 6)Use the following T-accounts to determine the cost of direct materials used and indirect materials used.
Raw Materials
Work in Process
Inventory
Inventory
Balance 16 Balance 32 Purchases 230 X Direct Cost of Balance 24 materials Y goods manufactured 744 Direct labour 320 Manufacturing overhead 200 Balance 8CHAPTER 3
E3-29A Record journal entries
(Learning Objectives 2, 3, 5, & 6)The following transactions were incurred by Dutch Fabricators during January, the first month of its fiscal year.
Requirements
1. Record the proper journal entry for each transaction.
a. $190,000 of materials were purchased on account.
b. $174,000 of materials were used in production; of this amount, $152,000 was used on specific jobs.
c. Manufacturing labour and salaries for the month totalled $225,000. A total of $190,000 of manufacturing labour and salaries was traced to specific jobs, while the remainder was indirect labour used in the factory.
d. The company recorded $20,000 of depreciation on the plant and plant equipment. The company also received a plant utility bill for $10,000.
e. $81,000 of manufacturing overhead was allocated to specific jobs.
2. By the end of January, was manufacturing overhead overallocated or underallocated? By how much?
E3-30A Analyze T-accounts
(Learning Objectives 2, 3, 5, & 6)Touch Enterprises produces LCD touch-screen products. The company reports the follow- ing information at December 31. Touch Enterprises began operations 11 months before, on January 31.
Work in Process
Wages
Manufacturing
Finished Goods
Raw Materials
Inventory
Payable
Overhead
Inventory
Inventory
30,000 123,000 70,000 70,000 2,000 48,000 123,000 111,000 52,000 32,000
60,000 10,000
48,000 Balance 0 37,000
Requirements
1. What is the cost of direct materials used?
2. What is the cost of indirect materials used?
3. What is the cost of direct labour?
4. What is the cost of indirect labour?
5. What is the cost of goods manufactured?
6. What is the cost of goods sold (before adjusting for any under- or overallocated manufacturing overhead)?
7. What is the actual manufacturing overhead?
8. How much manufacturing overhead was allocated to jobs?
9. What is the predetermined manufacturing overhead rate as a percentage of direct labour cost?
10. Is manufacturing overhead underallocated or overallocated? By how much?
E3-31A Prepare journal entries
(Learning Objectives 2, 3, & 6)Record the following transactions in Micro Speakers’ general journal.
a. Received bill for website expenses, $3,400.
b. Incurred manufacturing wages, $15,000, 70% of which was direct labour and 30% of which was indirect labour.
c. Purchased materials on account, $14,750.
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e. Recorded manufacturing overhead: depreciation on plant, $13,000; prepaid plant insurance expired, $1,700; plant property tax, $4,200 (credit Property Tax Payable).
f. Allocated manufacturing overhead to jobs, 200% of direct labour costs.
g. Cost of jobs completed during the month: $33,000.
h. Sold all jobs (on account) completed during the month for $52,000. Assume a per- petual inventory system.
E3-32A Record completion and sale of jobs
(Learning Objectives 2 & 6)September production generated the following activity in Digital Connection’s work in process inventory:
Work in Process Inventory
Sep 1 Bal 16,000 Direct materials used 29,000 Direct labour assigned
to jobs 32,000 Manufacturing
overhead allocated
to jobs 12,000
Production was completed in September, but is not recorded yet; it consists of Jobs B-78 and G-65, with total costs of $41,000 and $37,000, respectively.
Requirements
1. Compute the balance of work in process inventory at September 30.
2. Prepare the journal entry for the production completed in September.
3. Prepare the journal entry to record the sale (on credit) of Job G-65 for $45,000. Assume a perpetual inventory system.
4. What is the gross profit of Job G-65? What other costs must this gross profit cover?
ExErciSES
Group b
E3-33b Identify type of costing system
(Learning Objective 1)Specify whether each of the following companies would be more likely to use job costing or process costing.
a. Optometrist’s office
b. Hospital
c. Oil refinery
d. Textile (fabric) manufacturer
e. Corporate caterer
f. Ice cream manufacturer
g. Advertising agency
h. Computer chip manufacturer
i. Small engine repair shop
j. Soft drink bottler
k. Photography studio
l. Satellite manufacturer
m. Sugar manufacturer
n. Menswear custom tailor
E3-34b describe the flow of costs in a job cost shop
(Learning Objective 2)Outdoor Furniture Company manufactures outdoor furniture from recycled plastic lumber (HDPE). The following table contains events that occur in the manufacture and sale of tables by Outdoor Furniture Company. Put the events in the order in which they would occur by designating the step number in the Order column. Also indicate with a “ ” or a “” whether that account would increase or decrease as a result of the event.
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Event Order
Raw Materials
Inventory InventoryWIP InventoryFg
Cost of goods sold no Effect on Inventory or COgs a. John Hosbach, an employee of
Outdoor Furniture Company, drills holes into the cut lumber so that these pieces can be used in building the basic model of an outdoor table. b. An order of recycled plastic lumber, the primary component in making the outdoor tables, is received by Outdoor Furniture Company. The plastic lumber is stored in the stock- room until needed in production. c. An order is received for five of the
basic model outdoor tables and the tables are shipped to the customer. d. Several of the plastic lumber boards
are taken from the stockroom to be cut down into the lengths used in the basic model of the outdoor table.
e. The customer is billed for the five basic model outdoor tables. f. Twelve of the basic model outdoor
tables are completed and are stored in the finished goods warehouse.