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QS04 - Class Exercises Solution

1. Loraine Company allocated $18,900 in manufacturing overhead to WIP using a predetermined overhead rate of 70% of direct labor cost. The cost of goods manufactured for August was $69,500. 2. Dasilva Company allocated $22,610 in manufacturing overhead to WIP using a predetermined rate of $11.90 per direct labor hour. The cost of goods manufactured for May was $92,688. 3. Lund Company allocated $19,000 in manufacturing overhead to WIP using a rate of 95% of direct labor cost. The cost of goods manufactured for March was $62,500 and the cost of goods sold was $68,500.

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3K views3 pages

QS04 - Class Exercises Solution

1. Loraine Company allocated $18,900 in manufacturing overhead to WIP using a predetermined overhead rate of 70% of direct labor cost. The cost of goods manufactured for August was $69,500. 2. Dasilva Company allocated $22,610 in manufacturing overhead to WIP using a predetermined rate of $11.90 per direct labor hour. The cost of goods manufactured for May was $92,688. 3. Lund Company allocated $19,000 in manufacturing overhead to WIP using a rate of 95% of direct labor cost. The cost of goods manufactured for March was $62,500 and the cost of goods sold was $68,500.

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Accounting 225 Quiz Section #4

Chapter 3-1 Class Exercises Solution


1. Loraine Company applies manufacturing overhead to jobs using a predetermined
overhead rate of 70% of direct labor cost. During August, the following transactions were
recorded by the company:

a) Manufacturing Overhead allocated to WIP in August was: $18,900


b) The Cost of Goods Manufactured for August was: $69,500
Raw Materials
30,000
31,000

DM
DL
MOH

8,000

WIP
7,600
31,000
27,000
18,900
15,000

FG
69,500
69,500

MOH
19,000

18,900 (27000 x 0.7)

19,000

Accounting 225 Quiz Section #4


Chapter 3-1 Class Exercises Solution
2. Dasilva Company had only one job in process on May 1. The job had been charged with
$1,400 of direct materials, $6,192 of direct labor, and $5,712 of manufacturing overhead
cost. The company assigns overhead cost to jobs using the predetermined overhead rate
of $11.90 per direct labor-hour. During May, the following activity was recorded:

Raw materials consist solely of items that are classified as direct materials.
a) The balance in the raw materials inventory account on May 30 was: $4,700
b) Manufacturing Overhead allocated to WIP in May was: $22,610
c) The cost of goods manufactured for May was: $92,688

Raw Materials
8,500
48,000
51,800

DM
DL
MOH

4,700

WIP
13,304
51,800
24,510
22,610
19,536

Finished Goods
92,688
92,688

MOH
21,000

22,610 (1900 x 11.9)

Accounting 225 Quiz Section #4


Chapter 3-1 Class Exercises Solution
3. Lund Company applies manufacturing overhead to jobs using a predetermined overhead
rate of 95% of direct labor cost. During March, the following transactions were recorded
by the company:
Raw Materials:
Purchased
$40,000
Used (75% Direct Materials)
$36,000
Labor:
DL Hours Worked
2,500
Direct Labor Cost
$20,000
Indirect Labor Cost
$5,500
Manufacturing Overhead:
Total MOH Incurred
$17,000
Inventories:
Raw Materials (3/31)
$7,500
WIP (3/1)
$10,500
WIP (3/31)
$14,000 **Contains $5000 of DL Cost
Finished Goods (3/1)
$11,000
Finished Goods (3/31)
$5,000
a) Complete cost flows for March using T-Accounts for RM, WIP, FG, and MOH.
Raw Materials
3500
40000 36000 **75% DM
7500
**25% IM
MOH
0
17000 19000 **95% DL
2000

BB
DM
DL
MOH
EB

WIP
Finished Goods
10500
11000
27000 62500 COGM 62500 68500 COGS
20000
5000
19000
14000

b) The Cost of Goods Manufactured for March was $62,500


c) The Cost of Goods Sold for March was $68,500
d) How much MOH incurred was not indirect materials? $8,000 (17,000 (36,000 x
25%))
e) The amount of Direct Materials cost in the March 31 WIP balance was $4,250
3/31 WIP
Less: DL
MOH
Equals DM

14,000
5,000
4,750 **95% DL
4,250

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