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Cost accounting Cost accounting cycle problems

Problem 1. Journal entries Problem 2. Prime cost and conversion cost


On August 1, 2010, Sietens Corporation had the following account Barbieri Co. makes aluminum canoes. The company’s June 2010 costs for
balances: material and labor were as follows:
Raw Material Inventory (both direct and indirect) $ 72,000
Work in Process Inventory 108,000 Material costs
Finished Goods Inventory 24,000 Janitorial supplies $ 1,800
Chrome rivets to assemble canoes 12,510
During August, the following transactions took place. Sealant 1,230
1. Raw material was purchased on account, $570,000. Aluminum 1,683,000
2. Direct material ($121,200) and indirect material ($15,000) were
issued to production. Labor costs
3. Factory payroll consisted of $180,000 for direct labor employees Janitorial wages $ 9,300
and $42,000 for indirect labor employees. Aluminum cutters 56,160
4. Offi ce salaries totaled $144,600 for the month. Salespeople salaries 43,050
5. Utilities of $40,200 were accrued; 70 percent of the utilities cost is Welders 156,000
for the factory. Factory supervisor salaries 101,250
6. Depreciation of $60,000 was recorded on plant assets; 80 percent
of the depreciation is related to factory machinery and equipment. a. What is the direct material cost for June?
7. Rent of $66,000 was paid on the building. Th e factory occupies 60 b. What is the direct labor cost for June?
percent of the building. c. What is the total indirect material cost and the indirect labor cost
8. At the end of August, the Work in Process Inventory balance was for June?
$49,800. d. What is the total prime cost for June?
9. At the end of August, the balance in Finished Goods Inventory was e. What is the total conversion cost for June?
$53,400.
Problem 3. Cost of goods manufactured and sold
Sietens Corporation uses an actual cost system and debits actual overhead Beckman Company manufactures staplers. At the beginning of November,
costs incurred to Work in Process Inventory. the following information was supplied by its accountant:

a. Determine the total amount of product cost (cost of goods Direct materials inventory $48,500
manufactured) and period cost incurred during August 2010. Work in process inventory 10,000
b. Compute the cost of goods sold for August 2010. Finished goods inventory 10,075

During November, direct labor cost was $22,000, direct materials


purchases were $70,000, and the total overhead cost was $216,850. The
inventories at the end of November were:

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Cost accounting Cost accounting cycle problems

Direct materials inventory $15,900 were sold for $8 each. The actual unit cost per camera produced during the
Work in process inventory 6,050 year is as follows:
Finished goods inventory 8,475
Direct materials $2.25
a. Prepare a cost of goods manufactured statement for November. Direct labor 1.50
b. Prepare a cost of goods sold schedule for November. Variable overhead 0.65
Fixed overhead 0.70
Problem 4. Comprehensive Total unit cost $5.10
Huebert Company provided the following information for last year:
Research and development expenses amounted to $70,000. The selling
Beginning inventories: expenses consisted of a commission of $0.25 per unit sold and advertising
Direct materials $52,700 payments totalling $36,000. Administrative expenses, all fixed, equalled
Work in process 25,000 $83,000. There were no beginning and ending work-in-process
Finished goods 75,000 inventories. Beginning finished goods inventory was $30,600 for 6,000
cameras.
Ending inventories:
Direct materials $ 42,700 a. Calculate the number of cameras in ending finished goods
Work in process 50,000 inventory and their costs.
Finished goods 140,000 b. Prepare a cost of goods sold statement for last year.
c. Prepare an income statement for last year.
During the year, direct materials purchases amounted to $270,000, direct
labor cost was $304,000, and overhead cost was $506,000. During the year, Problem 6. Income statement
25,000 units were completed. Thomson Company, a manufacturing firm, has supplied the following
information from its accounting records for the last calendar year:
a. Calculate the total cost of direct materials used in production. Direct labor cost $371,500
b. Calculate the cost of goods manufactured. Calculate the unit Purchases of direct materials 160,400
manufacturing cost. Freight-in on materials 1,000
c. Calculate the cost of goods sold. Factory supplies used 37,800
d. Of the unit manufacturing cost calculated in Requirement 2, Factory utilities 46,000
assume $11 is direct materials and $12 is direct labor. What is the Commissions paid 80,000
prime cost per unit? Conversion cost per unit? Factory supervision and indirect labor 190,000
Advertising 23,900
Problem 5. Income statement Material handling 26,750
Photo-Dive, Inc., manufactures disposable underwater cameras. During the Work in process inventory, January 1 201,000
last calendar year, a total of 270,000 cameras were made, and 274,000 Work in process inventory, December 31 98,000
Direct materials inventory, January 1 47,000

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Cost accounting Cost accounting cycle problems

Direct materials inventory, December 31 17,000


Finished goods inventory, January 1 28,000
Finished goods inventory, December 31 45,200

a. Prepare a cost of goods manufactured statement.


b. Prepare a cost of goods sold statement.
c. Prepare an income statement

Problem 7. Cost of goods manufactured


The Work in Process Inventory account of Phelan Corporation increased
$23,000 during November 2010. Costs incurred during November included
$24,000 for direct material, $126,000 for direct labor, and $42,000 for
overhead. What was the cost of goods manufactured during November?

Problem 8. Missing values


For each of the following independent situations, calculate the missing
values:
a. The Bartlesville plant purchased $352,000 of direct materials
during April. Beginning direct materials inventory was $21,000,
and direct materials used in production were $300,000. What is
ending direct materials inventory?
b. Aston Company produced 12,000 units at an average cost of $6
each. The beginning inventory of finished goods was $4,680. (The
average unit cost of beginning inventory was $5.85.) Aston sold
8,900 units. How many units remain in ending finished goods
inventory?
c. Beginning WIP was $50,000, and ending WIP was $18,750. If total
manufacturing costs added were $93,000, what was the cost of
goods manufactured?
d. If the conversion cost is $32 per unit, the prime cost is $19.50, and
the manufacturing cost per unit is $39.50, what is the direct
materials cost per unit?
e. Total manufacturing costs added for October were $156,900. Prime
cost was $90,000, and beginning WIP was $60,000. The cost of
goods manufactured was $125,000. Calculate the cost of overhead
for October and the cost of ending WIP.

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