Chapter 1 Homework Solution

Answers to True-False Statements
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Answers to Multiple Choice Questions

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Solution 152 (3 min.)

Product Costs
Direct Materials
Direct Labor
Manufacturing
Overhead
(a
)
X
X
(b
)
X
X
(c
)
(d
)

a. MO
b.
DM
c.
DL
d.
MO

a. MO
b. DM
c. MO
d. DL
e. MO
f.
MO
g. DM
h. DM
Product Costs
Direct Materials
Direct Labor
Manufacturing
Overhead
a.
b.
X
X
c.
d.

1. Product cost
4. Period cost
2. Product cost
5. Product cost
3. Product cost
6. Period cost

(a) Direct labor
$ 580,000
Direct materials used
421,000
Total manufacturing overhead
206,000
Total manufacturing costs
(b) Beginning work in process

Total cost of work in process

(a) Total manufacturing costs
$1,207,000
47,000
1,207,000
$1,254,000
$88,000
Less: Direct materials used
(17,000)
Less: Direct labor
(42,000)
Equals: Factory overhead
$29,000
(b) Total manufacturing costs
$480,000
Less: Direct materials
(148,000)
Less: Factory overhead
(112,000)
Equals: Direct labor
$220,000
(a
)
Direct Materials
Used
Direct Labor
Factory
Overhead
Total Manufacturing
Costs
$48,000
$72,000
$64,000
$184,000
(b
)
$95,000
$130,000
$80,000
$305,000
(c
)
$90,000
$80,000
$120,000
$270,000

(a) Direct labor
$ 76,000
84,000
60,000
$220,000
(b) Beginning work in process
$ 45,000

Less ending work in process
Cost of goods manufactured
220,000
(30,000)
$235,000

Current Assets
Cash
$ 61,000
Accounts receivable
41,000
Inventories
Finished goods
26,000
Work in process
32,000
Raw materials
$17,000 75,000
Prepaid expenses
3,000
Total current assets
$180,000

1. F
6. M
2. M
7. F
3. F
8. F
4. M
9. M
5. F
10. F

1. DL
4. MO
2. MO
5. MO
3. DM
6. DM

1. MO
6.
MO
2.
MO
7.
MO
3.
DL
8.
DM
4.
MO
9.
MO
5.
DM
Solution 165
10. MO
(69 min.)
a.
Advertising
b.
c.
Sales salaries
d.
Indirect factory labor
e.
Repairs to office equipment
f.
Factory manager's salary
g.
Direct labor
h.
Indirect materials

(a) Factory utilities............................................................
$ 13,500
Depreciation on factory equipment.............................
12,650
(b)
Indirect factory labor...................................................
48,900
Indirect materials.........................................................
70,800
Factory manager's salary.............................................
8,000
Property taxes on factory building...............................
2,500
Factory repairs.............................................................
2,000
Manufacturing overhead..............................................
$158,350
Direct materials...........................................................
$157,600
Direct labor..................................................................
79,100
Manufacturing overhead..............................................
158,350
Product costs...............................................................
$395,050

(a) Delivery service (product) costs:
Indirect materials
$ 8,400
Depreciation on delivery equipment
11,200
Dispatcher's salary
5,000
Gas and oil for delivery trucks
3,200
Drivers' salaries
14,000
Delivery equipment repairs

Total
(b)
300
$ 42,100
Period costs:
Property taxes on office building
CEO's salary
Advertising
Office supplies
870
12,000
5,100
650
Office utilities
1,490
Repairs on office equipment
180
Total
$20,290

1. Pr
6.
Pe
2.
Pe
7.
Pr
3.
Pe
8.
Pe
4.
Pr
9.
Pr
5.
Pr
10.
Pr

Direct
Direct
Cost Item
Materials
1.
2.
Labor
Manufacturing Period
Overhead
Costs
X
X
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Direct
Materials
Used
Direct
Labor
Manufacturi
ng
Overhead
Total
Manufacturi
ng Costs
Work in
Process
(1/1)
Work in
Process
(12/31)
Cost of
Goods
Manufacture
d
(a
)
$38,000
$80,000
$48,000
$166,000
$120,00
0
$96,000
$190,000
(b
)
$149,00
0
$53,000
$90,000
$292,000
$117,00
0
$98,000
$311,000
(c
)
$53,000
$116,00
0
$121,000
$290,000
$403,00
0
$178,00
0
$515,000

1. Direct labor
(a)
2. Office supplies used
(b)
3. Depreciation on printing machines
(a)
4. Finished goods inventory, 12/31
(b), (c)
5. Raw materials inventory, 1/1
(a)
6. Cost of goods manufactured
(a), (b)
7. Work in process, 1/1
(a)
8. Office supplies inventory, 12/31
(c)
9. Indirect labor
(a)
10. Heat and electricity for the print shop
(a)

Raw materials:
(100 70) $130 = $3,900
Work in process:
(50 20%) $130 = $1,300
Finished goods:
(50 80% 50%) $130 = $2,600
Cost of goods sold:
(50 80% 50%) $130 = $2,600
Selling expenses:
20 $130 = $2,600
Costs to account for: 100 $130 = $13,000

Raw materials inventory
$ 3,900
Work in process inventory
1,300
Finished goods inventory
2,600
Cost of goods sold
2,600
Selling expenses
2,600
Total
$13,000

(a)
PETERS COMPANY
(Partial) Income Statement
For the Month Ended June 30, 2013

_
Sales.........................................................................................
$590,000
Cost of goods sold

Finished goods inventory, June 1......................................$ 43,500
Cost of goods manufactured............................................. 417,700*
Cost of goods available for sale........................................ 461,200
Finished goods inventory, June 30....................................
65,200
Cost of goods sold.............................................................
396,000
Gross profit...............................................................................
$ 194,000
*$18,100 + $430,000 $30,400 = $417,700
(b)
PETERS COMPANY
Current assets
Cash.............................................................................
$ XXXX
Accounts receivable.....................................................
XXXX
Inventories:
Finished goods........................................................ $65,200
Work in process......................................................
30,400
Raw materials.........................................................
18,000

(a) Work-in-process, 1/1..........................................
113,600
$ 22,000
Direct materials used........................................
$ 120,000
Direct labor........................................................
110,000
Manufacturing overhead
Depreciation on plant................................... $60,000
Factory supplies used...................................
23,000
Property taxes on plant................................
19,000
Total manufacturing overhead...........................
102,000
Total manufacturing costs.................................
332,000
Total cost of work-in-process.............................
354,000
Less:
Work-in-process, 12/31......................................
15,500
Cost of goods manufactured.............................
$338,500
(b) Finished goods, 1/1............................................
$ 65,000
338,500
Cost of goods available for sale.........................
403,500
Less: Finished goods, 12/31...............................
50,600
Cost of goods sold.............................................
$352,900

(a) Work-in-process, 1/1.........................................
$ 13,500
Direct materials
Materials inventory, 1/1...............................
$ 26,000
Materials purchased....................................
170,000
Materials available for use...........................
196,000
Less: Materials inventory, 12/31..................
30,000
Direct materials used........................................
$166,000
Direct labor.......................................................
220,000
Manufacturing overhead...................................
180,000
Total manufacturing costs.................................
566,000
Total cost of work-in-process.............................
579,500
Less: Work-in-process, 12/31...........................
22,200
$557,300
(b) Sales.................................................................
$800,000
Cost of goods sold

Finished goods, 1/1......................................
$ 30,000
Cost of goods manufactured........................
557,300
Cost of goods available for sale...................
587,300
Less: Finished goods, 12/31.........................
21,000
Cost of goods sold..................................

Gross profit.......................................................
566,300
$233,700

A + $57,000 + $46,500 = $185,650
$239,500 $9,000 = F
A = $82,150
F = $230,500
$185,650 + B = $221,500
$130,000 + G + $102,000 = $263,700
B = $35,850
G = $31,700
$221,500 C = $180,275
$263,700 + H = $327,000
C = $41,225
H = $63,300
$65,400 + $76,000 + $81,600 = D
$327,000 $80,000 = I
D = $223,000
I = $247,000
$223,000 + $16,500 = E
E = $239,500

SAMPSON MANUFACTURING COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended December 31, 2013
Work in process, December 1
$ 20,000
Direct materials
Raw materials inventory, December 1
$12,000
Raw materials purchases
95,000
Total raw materials available for use
107,000
Less: Raw materials inventory, December 31
19,000
88,000
Direct labor
70,000
Indirect labor
$21,000
Factory supervisory salaries
12,000
Factory depreciation expense
8,000
Factory utilities expense
6,000
47,000
205,000
225,000
Less: Work in process, December 31
15,000

(a) Direct labor
$210,000
$140,000
151,000
(b)
208,000
$499,000
Beginning work in process
$ 26,000
499,000
$525,000

a. Raw materials inventory, beginning
8,000
93,000
Raw materials available for use
101,000
Less: Raw materials inventory, ending
7,000
$ 94,000
b. Manufacturing overhead:
Factory rent
$ 8,000
Factory utilities
10,000
Indirect materials
4,000
Indirect labor
9,000
c.
$31,000
SIMON COMPANY
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2013
Work in processing, beginning
$ 15,000
Direct materials
Raw materials inventory, beginning
8,000
93,000
101,000
Less: Raw materials inventory, ending
7,000
$94,000
Direct labor
42,000
31,000
167,000
182,000
Less: Work in process, ending
13,000

d.
$169,000
SIMON COMPANY
(Partial) Income Statement

Finished goods inventory, January 1
$ 16,000
169,000
Cost of goods available for sale
185,000
Less: Finished goods inventory, December 31

Cost of goods sold

(a)
$415,000 ($890,000 $280,000 $195,000).
(b)
$970,000 ($890,000 + $80,000).
(c)
$895,000 ($970,000 $75,000).
(d)
$65,000 ($960,000 $895,000).
(e)
$140,000 ($960,000 $820,000).
12,000
$173,000
(f)
$130,000 ($640,000 $510,000).
(g)
$115,000 ($640,000 $525,000).
(h)
$563,000 ($525,000 + $38,000).
(i)
$488,000 ($563,000 $75,000).
(j)
$205,000 ($450,000 $90,000 $155,000).
(k)
$548,000 ($98,000 + $450,000).
(l)
$163,000 ($548,000 $385,000).
(m) $95,000 ($480,000 $385,000).

(n)
$125,000 ($480,000 $355,000).

NOLAND MANUFACTURING COMPANY
Cost of Goods Manufactured Schedule
Work in process (1/1)
$320,000
Direct materials
Raw materials inventory (1/1)
$ 46,000
246,000
292,000
Raw materials inventory (12/31)
37,000
$255,000
Direct labor
91,000
Indirect labor
19,000
Factory depreciation
38,000
Factory utilities
39,000
Total overhead
96,000
442,000
762,000
Less: Work in process (12/31)
322,000
$440,000

Raw materials inventory, March 1
$ 76,000
Raw materials purchases ($240,000 + $92,000)
332,000
Total raw materials available for use
408,000
Less: Raw materials inventory, March 31
70,000
Direct materials used during March
$338,000
Note: Payment on account to Reed is irrelevant to the direct materials used

calculation.

Direct
Materials Used
Direct Labor
Factory
Overhead
Total
Manufacturing
Costs
(a)
$56,000
$72,000
$54,000
$182,000
(b)
$109,000
$53,000
$90,000
$252,000
(c)
$53,000
$151,000
$96,000
$300,000

1. B
5. A
2. B, C
6. A, C
3. A
7. A
4. A
8. B

LESTER COMPANY
(Partial) Balance Sheet
December 31, 2013
Current assets
Cash
$20,000
Short-term investments
25,000
Accounts receivable
4,000
Inventories:
Finished goods
$35,000
Work in process
18,000
Raw materials
17,000
Prepaid expenses
Supplies
Total current assets
70,000
2,000
500
$121,500

Chapter 1 Homework Solution

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Chapter 1 Homework Solution

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Answers to True-False Statements

Answers to Multiple Choice Questions

Solution 152 (3 min.)

Solution 153 (2 min.)

Solution 154 (4 min.)

Solution 156 (5 min.)

Solution 157 (5 min.)

Direct materials used

Total manufacturing overhead

Total manufacturing costs

(b) Beginning work in process

Solution 158 (3 min.)

Less: Direct materials used

Less: Direct labor

Equals: Factory overhead

(b) Total manufacturing costs

Less: Direct materials

Less: Factory overhead

Equals: Direct labor

Solution 159 (4 min.)

Solution 160 (5 min.)

Direct materials used

Total manufacturing overhead

Total manufacturing costs

(b) Beginning work in process

Total manufacturing costs

Solution 161 (4 min.)

Total current assets

Solution 162 (711 min.)

Solution 163 (5 min.)

Solution 164 (810 min.)

Direct materials used

Indirect factory labor

Repairs to office equipment

Factory manager's salary

Solution 166 (1012 min.)

Depreciation on factory equipment.............................

Indirect factory labor...................................................

Factory manager's salary.............................................

Property taxes on factory building...............................

Solution 167 (1012 min.)

Depreciation on delivery equipment

Gas and oil for delivery trucks

Delivery equipment repairs

Repairs on office equipment

Solution 168 (710 min.)

Solution 169 (1015 min.)

Solution 170 (6 min.)

Solution 171 (812 min.)

2. Office supplies used

3. Depreciation on printing machines

4. Finished goods inventory, 12/31

5. Raw materials inventory, 1/1

6. Cost of goods manufactured

7. Work in process, 1/1

8. Office supplies inventory, 12/31

10. Heat and electricity for the print shop

Solution 172 (1217 min.)

(50 20%) $130 = $1,300

(50 80% 50%) $130 = $2,600

Cost of goods sold:

(50 80% 50%) $130 = $2,600

Costs to account for: 100 $130 = $13,000

Work in process inventory