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Cost Accounting I Practice Set Exam Phase #3

Part 1: The Perrot Company is a computer parts manufacturer and had the following transactions and events
during the year. Estimated overhead for the year was $175,000; estimated labor for the year was 6,000 hours.
a. Purchased materials on account, $126,000.
b. Traced materials to jobs $110,880; general shop materials used $9,500.
c. Labor traced to jobs $165,000, untraced labor was $22,200.
d. Overhead incurred (not including materials or labor): $139,600.
e. Overhead is applied to jobs based on labor hours. All workers were paid $30/hr.
f. Ending work-in-process consisted of one job with a cost of $1,976. There was no beginning work-in-process.
g. Completed jobs were billed to the customers for $476,000.
Required:
(1) Prepare the journal entries to record the transactions for the year.
a.

Materials purchased:
Materials Inventory.................... 126,000
Accounts Payable...............

126,000

b. Traced materials:
Work in Process.
110,880
Manufacturing Overhead..... 9,500
Materials Inventory...........

120,380

c. Labor traced:
Work in Process......................... 165,000
Manufacturing Overhead.22,200
Wages Payable..................

187,200

d. Overhead incurred:
Manufacturing Overhead Control..139,600
Cash....................................

139,600

e. Applied overhead based labor hours:


Work in Process......................... 180,000
Applied manufacturing overhead
f. Ending work-in-process:
Finished Goods.......................... 434,321
Work in Process.................
g. Completed jobs billed:
Finished Goods.......................... 476,000
Accounts Receivable..........

180,000

434,321

476,000

Excellent work! One minor error on journal entry E, the overhead applied is 160,417 (5500 hours x
29.16667). Your score 49/50.

Part 2: Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory
consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800
materials and $104,500 conversion. 58,000 units were started into production during the month with material
costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100%
complete as to materials and 40% complete as to labor.
Using the weighted average costing method:
a. Compute the equivalent units of production for each input.
Equivalent units of production

63,000

63,000

59,400

b. Compute the cost per unit.

Cost per equivalent unit

Total
63.90

Materials
26.38

Conversion
37.52

c. Compute the cost transferred out to finished goods.

Costs assigned to units transferred out

Total
$ 3,642,353

d. Compute the ending work in process inventory balance.


Costs assigned to WIP ending
inventory
$248,322

Materials
$ 1,503,533

$158,267

Conversion
$ 2,138,819

$90,056

Using the FIFO (first-in-first out method):


a. Compute the equivalent units of production for each input.
Equivalent units of production

63,000

58,000

56,650

b. Compute the cost per unit.

Cost per equivalent unit

Total
$ 64.00

Materials
$26.50

Conversion
$ 37.50

c. Compute the cost transferred out to finished goods.

Costs assigned to units transferred out

Total
3,642,353

d. Compute the ending work in process inventory balance.


Costs assigned to WIP ending
inventory
$249,000

Materials
1,503,533

$159,000

$90,000

Conversion
2,138,819