ACC104 CHAPT. 17 SOLUTIONS

Topics: Inventory, Costs, Manufacturing Pages: 35 (2705 words) Published: April 1, 2014
Solutions to Exercises
Ex. 17–1
a.
Process costing or activity-based costing

b.
Cost of finished goods manufactured

c.
Equivalent units

d.
None (this statement describes underapplied overhead)

e.
Job order costing or activity-based costing

f.
Activity-based costing

Ex. 17–2
a.
(1)
Materials Inventory
XXX

Accounts Payable

XXX

To record the purchase of direct materials.

(2)
Work in Process Inventory
XXX

Materials Inventory

XXX

To record cost of direct materials used.

b.
(1)
Direct Labor
XXX

Cash

XXX

To record factory payroll paid to direct workers.

(2)
Work in Process Inventory
XXX

Direct Labor

XXX

To record cost of direct labor applied to production of the period.

c.
(1)
Manufacturing Overhead
XXX

Cash (or Accounts Payable)

XXX

To record factory overhead cost (such as payroll for indirect labor) incurred.

(2)
Work in Process Inventory
XXX

Manufacturing Overhead

XXX

To record factory overhead costs applied to production of the period.

d.
(1)
Finished Goods Inventory
XXX

Work in Process Inventory

XXX

To record transfer of cost of completed goods to the Finished Goods Inventory account.

(2)
Cost of Goods Sold
XXX

Finished Goods Inventory

XXX

To record cost of goods sold.

Ex. 17–3
a.
$3,150 ($900 + $2,250 = jobs no. 103 and 104)

b.
$7,440 ($4,200 + $3,240 = jobs no. 101 and 102)

c.
$13,690 ($4,200 + $3,240 + $6,250 = jobs no. 101, 102, and 104)

d.
$9,700 ($6,000 + $3,700 = jobs no. 105 and 106)

e.
$2,900 (job no. 103)

Ex. 17–4
a.
Work in Process Inventory
12,200

Materials Inventory

7,720

Direct Labor

1,400

Manufacturing Overhead

3,080

Manufacturing costs incurred on job no. 321.

b.
Finished Goods Inventory
12,200

Work in Process Inventory

12,200

To record completion of job no. 321.

c.
Accounts Receivable
10,500

Sales

10,500

To record credit sale of 2,100 units from job no. 321 @ $5 per unit.

Cost of Goods Sold
6,405

Finished Goods Inventory

6,405

To record cost of sales for 2,100 units from job no. 321 (2,100  $3.05 per unit).

Ex. 17–5
a.
Process costing. Process costing is appropriate since the manufacturing costs are more easily traced to large batches of products instead of individual customers or jobs. ABC may not be warranted since most of the bakery’s products are likely to be produced in similar processes and will consume resources in the same manner.

b.
Job order costing and ABC. Job order costing is appropriate because most costs can be traced directly to particular clients. ABC would be useful assuming the different ser­vices (e.g., consulting and auditing) provided by the CPAs consume differing amounts and/or types of resources.

c.
Job order costing. Job order costing is appropriate because most costs can be traced to individual construction projects. ABC may not be warranted due to the small amount of overhead used per job relative to direct materials and direct labor.

d.
Process costing. Process costing is appropriate because costs are more easily traced to large batches of products instead of individual customers or jobs. Since different types of paint products are likely to require similar processes, ABC may not be necessary.

e.
Process costing and ABC. Process costing is appropriate because costs are more easily traced to large batches of products instead of individual customers or jobs. Many oil and gas refineries produce products that require quite different manufacturing processes and consume differing amounts of resources. In this environment, ABC would be useful.

f.
Job order costing. Job order costing is appropriate because most costs are...
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