Chapter 7 Answer Key

TRUE OR FALSE
1. F
2. T
3. F
4. T
5. F
6. T
7. T
8. F
9. F
10. T
11. F
12. F
13. F
14. F
15. F
16. T
17. T
18. T
19. F
20. T
21. T
22. F
23. F
24. F
25. F
26. T
27. T
28. T
29. T
30. F
31. T
32. T
33. F
34. F
35. F
36. T
37. F
38. F
39. T
40. T
41. T
42. T
43. T
44. T
45. T
46. F
47. F
Multiple Choice

1. C

2. B

3. D

4. C

5. C

6. C

7. C

8. D

9. C

10. D

11. D
12. C

13. C

14. C

15. C

16. A

17. C

18. B

19. A

20. D

21. B

22. D

23. C

24. B

25. B

26. C

27. C

28. A

29. B

30. D

31. B

32. D

33. C

34. C

35. D
36. A

37. B

38. C

39. C

40. C

41. D

42. B

43. C

44. C

45. C

46. B

47. D
48. D

49. A

50. B/B

51. B/C/B

52. A

53. B/A

54. A

55. A/B

56. C

57. C

58. B

59. C

60. A/A

61. A/A/D

62. C

63. D/A/A/C/A/A

64. B/B/A/A

65. C/D

66. A/A

67. A

68. A

69. C/D/D/C

70. A/D/B

71. D
 72. B/A

73. B/B/D/D

74. D/B/A

75. D/A

76. D

77. D

78. C/A/D/A/A/B

79. C

80. B

81. B

82. B

83. B

Straight Problems
Problem 1

Answer
a. Job order
b. Job order
c. Process
d. Process
e. Job order
f. Process
g. Job order
h. Job order
i. Process
j. Job order
k. Process
l. Job order
m. Job order
n. Job order
o. Process
p. Job order
q. Process
r. Process
s. Job order
t. Job order
u. Process
v. Process
w. Process
x. Job order
y.
Problem 2

Answer
Work in Process 11,000
Factory overhead 350
Materials 11,350

Problem 3

Answer
1.

Materials 8,972,000
Accounts Payable 8,972,000

2.

Work in Process 8,171,000

Factory overhead 28,000
Materials 8,199,000

3.

Glue Wood Polyester Filling Rubber Total

Jan. 1 3,450 320,000 465,000 256,000 1,044,450
Add: Purchase 32,000 1,200,000 3,240,000 4,500,000 8,972,000
Less: Issuance 28,000 1,100,000 3,025,000 4,046,000 8,199,000
Jan. 31 7,450 420,000 680,000 710,000 1,817,450

Problem 4

Answer:
1.

Work in Process 2,859

Factory overhead 417
Payroll 3,276

Indirect
Direct labor Rate x Hours Direct Labor Rate x Hours
Rate Hours Labor Cost Hours Indirect Cost
Anthony D. 25 27 675 5 125
Inigo V. 20 28 560 4 80
Darwin A. 15 30 450 2 30
Bryan D. 22 28 616 5 110
Haji. A. 18 31 558 4 72
2,859 417
2. The labor cost of job 101 will be part of finished goods inventory while the labor cost of job 102 and job
103 will be part of work in process inventory

Problem 5

Answer
1.

1. Materials 342,000
AP 342,000

2. WIP 11 201,600
WIP 12 32,400
WIP other job 241,200
Materials 475,200

WIP 11 46,800
WIP 12 63,000
WIP other job 88,200
Wages Payable 198,000

3. FOH control 990,000

Various Accounts 990,000

4. WIP 11 238,680
WIP 12 321,300
WIP other jobs 449,820
FOH applied 1,009,800
(actual cost of DL x P5.10)

5. FG 537,480
WIP 537,480
(50,400 +238,680 +46,800 + 201,600

6. COGS 537,480
FG 537,480

Cash 752,472
Sales 752,472
2.

Raw Materials, beg 200,700

Add: Purchases 342,000
Total raw materials available for use 542,700
Less: raw materials end 67,500
indirect materials used -
Cost of direct materials used in production 475,200
Direct labor cost 198,000
Factory overhead applied 1,009,800
Total Manufacturing cost 1,683,000
Add: Work in process inventory, Oct. 1 75,600
Total cost of goods put into process 1,758,600
Less: work in process inventory, Oct. 31 1,221,120
Cost of goods manufactured 537,480
Add: Finished goods inventory, Oct. 1 -
TGAS 537,480
Less: Finished goods, Oct. 31 -
COGS 537,480

Problem 6

Answer

1. Materials 125,760
AP 125,760

2. WIP 110,656
Factory overhead control 4,608
Materials 115,264

WIP 101,760
FOH control 17,600
Wages Payable 119,360

3. FOH control 24,000

Various Payable 24,000

4. FOH control 8,448

Accumulated Depreciation 8,448

5. WIP 55,260
FOH applied 55,260
 6. FG 149,236
WIP 149,236

Job Materials Labor Machine Hours FOH Applied

11 12,640 11,840 99 5,940
12 15,456 16,000 147 8,820
13 10,240 8,000 115 6,900
15 21,760 22,400 154 9,240
60,096 58,240 30,900

7. COGS 95,836
FG 95,836

AR 146,368
Sales 146,368

2.
Raw Materials, beg -
Add: Purchases 125,760
Total raw materials available for use 125,760
Less: raw materials end 10,496
indirect materials used 4,608
Cost of direct materials used in production 110,656
Direct labor cost 101,760
Factory overhead applied 55,260
Total Manufacturing cost 267,676
Add: Work in process inventory, Jan. 1 -
Total cost of goods put into process 267,676
Less: work in process inventory, Jan. 31 118,440
Cost of goods manufactured 149,236
Add: Finished goods inventory, Jan. 1 -
TGAS 149,236
Less: Finished goods, Jan. 31 53,400
COGS 95,836

Problem 7

Answer
Work in Process 110,000
Factory overhead 10,000
Payroll 120,000
 Work in Process 66,000
Applied Factory overhead 66,000
(110,000/P25) x P15

Problem 8

Answer:
1.

1. Materials 40,000
Cash 40,000

2. Work in Process 22,860

Factory overhead Control 7,000
Materials 14,600
Payroll 15,260

3. Factory overhead Control 9,500

Accounts Payable 9,500

4. Factory overhead Control 4,000

Accumulated Depreciation 4,000

5. Work in Process 13,272

Factory overhead Applied 13,272
(120% x 11,060)

6. Finished Goods 21,372

Work in Process 21,372

Materials Labor FOH 120%DL Total

Job 302 3,600 1,900 2,280 7,780
Job 304 1,800 5,360 6,432 13,592
21,372

7. Accounts Receivable 33,980

Sales 33,980

Cost of Goods Sold 13,592

Finished Goods 13,592

2.
Raw Materials beg -
Add: Purchases 40,000
Total Materials Available for use 40,000
 Less: Raw Materials end 25,400
Indirect materials 2,800
Direct Materials Used 11,800
Direct Labor 11,060
Factory overhead Applied 13,272
Total Manufacturing Costs 36,132
Add: Work in Process beg -
Total Cost of Goods put into process 36,132
Less: Work in Process end 14,760
Cost of Goods Manufactured 21,372
Add: Finished Goods beg. -
Total Goods Available for Sale 21,372
Less: Finished Goods end 7,780
Cost of Goods Sold 13,592

Problem 9

Answer
1. FOH rate = P1,050,000/ 700,000 = 150% of DL
2.

Direct Materials 49,000

Direct Labor 28,000
FOH applied 42,000
WIP end Job 103 119,000

3.

Beg. WIP 78,750

DM used 87,500
DL 84,000
FOH applied 126,000
Total cost of goods put into process 376,250
WIP end 119,000
257,250

4. 257,250 x 140% = P360,150

Problem 10

Solution

1. Job#12 Job#13 Job#14 Job#15

Direct Labor 24,000 48,000 78,000 18,000
Rate per hour 12 12 12 12
Direct Labor Hours 2,000 4,000 6,500 1,500
X Factory overhead Rate 18 18 18 18
Applied Factory overhead 36,000 72,000 117,000 27,000

2. Total
Actual 318,000
Applied 252,000
Under-applied 66,000

3. Job#12 Job#13 Job#14 Job#15 Total

Direct Materials 16,500 69,000 90,000 13,500
Direct Labor 24,000 48,000 78,000 18,000
Factory overhead Applied 36,000 72,000 117,000 27,000
Total Manufacturing Costs 76,500 189,000 285,000 58,500 609,000
Work In Process beginning 258,000 49,500 - - 307,500
Total cost of goods put into process 334,500 238,500 285,000 58,500 916,500
Less: W ork in process end - Job 15 58,500
Cost of goods manufactured 858,000
Add: Finished goods beginning 0
Total goods available for sale 858,000
Less: Finished goods end - job 12 and 13 573,000
Cost of goods sold - job 14 285,000

4.
Income Statement
Sales 430,000
Less: Cost of Goods Sold 285,000
Add: Under-applied factory
overhead 66,000 351,000
Gross Profit 79,000
Less: Operating expenses 160,000
Operating Income (loss) (81,000)
 Problem 11

Answer
Job 10 Job 11
Direct materials 28,350 44,500
Direct labor 17,500 23,875
Factory Overhead applied 27,000 44,000
Total cost per job cost sheet (a) 72,850 112,375
Divide by units produced 760.00 1,250.00
Unit cost per job (b) 95.86 89.90

Problem 12

Answer:

Material Inventory Work in Process Finished Goods

1/1 220,500.00 1/1 178,500.00 1/1 126,000.00
1,617,000.00 1,459,500.00 DM 1,459,500.00 7,539,000.00 7,539,000.00 7,455,000.00
12/31 378,000.00 DL 1,575,000.00 12/31 210,000.00
OH 4,459,000.00
133,000.00

Factory overhead Accounts Payable Cost of Goods Sold

4,432,750.00 4,459,000.00 26,250.00 1/1
1,433,250.00 1,617,000.00 7,455,000.00
26,250.00 210,000.00

Accrued Payroll Sales Accounts Receivable

21,000.00 1/1 1/1 115,500.00
1,543,500.00 1,575,000.00 8,505,000.00 8,505,000.00 8,463,000.00
52,500.00 12/31 12/31 157,500.00

Problem 13

Answer
1. It will be recorded in Three different documents: 1. Material requisition form for job# 1001. 2. Time
tickets for each worker, and 3. job cost sheet

Material Requisition Form

Quantity Unit Cost Total Costs
Blanks 100 20 2,000
Nibs 2,400 2 4,800
6,800
 Time
Time Ticket Job#1001 Started Ended Time Completed Rate Total
Jessie Mendiola 8:00 12:00 4 50 200

Time Ticket Job#1001

Maja Salvador 8:30 11:30 3 40 120
Total Direct labor 320

Job Cost Sheet #1001

Direct Materials 6,800
Direct Labor
Jessie Mendiola 200
Maja Salvador 120
7,120

Problem 14

Solution:
Department
1. 1 Department 2
Total Budgeted Factory overhead P2,880,000 P480,000
÷ Machine Hours 480,000 ÷ Direct labor hours 240,000
Predetermine Factory overhead Rate P6 P2

2. Job 123 Job 124 Total

Department 1
16,000 x P6 96,000 20,000 x P6 120,000 216,000
Department 2
P 96,000 ÷ P 12 = 8,000 hours x P2 16,000 P 153,600 ÷ P 12 = 12,800 hours x P2 25,600 41,600
Total Factory overhead applied 112,000 145,600 257,600

Job Job
123 124
Materials used 84,000 128,000
Direct Labor 96,000 153,600
Factory overhead applied 112,000 145,600
Total Costs 292,000 427,200

3. Department 1 Department 2
Actual 222,000 40,800
Applied 216,000 41,600
Variance Under-applied 6,000 Over-applied (800)
Problem 15

Answer

Materials W ork in Process Finished Goods

beg 120,000 beg 160,000 beg 320,000
960,000 880,000 DM 720,000 3,760,000 3,760,000 3,600,000
DL 1,200,000
FOH applied 1,920,000 480,000

end 200,000 240,000

Factory overhead W ages Payable Cost of Goods Sold

72,000 beg.
1,840,000 1,920,000 1,480,000 1,440,000 3,600,000
32,000

1. 880,000
2. (880,000 – 720,000) = 160,000
3. (1,440,000 – 1,200,000) = 240,000
4. 3,760,000
5. 3,600,000
6. (1,920,000/1,200,000) = 160% of Direct labor
7. actual 1,840,000 – applied 1,920,000 =80,000 over-applied
8. 240,000;
240,000 = DM + DL + FOH
240,000 = DM + 60,000 + (160% DL)
240,000 = DM + 60,000 + 96,000
DM = 240,000 – 60,000 – 96,000
DM = 84,000
FOH = 96,000

Problem 16

Answer

FOH rate (8,820,000 / 441,000 hours) 20.00

Job 567
Beginning Balance -
Cast added this month
Direct material 85,455
Direct labor 98,303
FOH applied (6,300 x P20) 126,000
Work in Process end 309,758
 Job GH 456
Beginning Balance 154,575
Cast added this month
Direct material 323,100
Direct labor 144,788
FOH applied (12,150 x P20) 243,000
Finished goods end 865,463

Direct Materials 826,605

Direct labor 500,535
FOH applied 688,500
Total manufacturing costs 2,015,640

Direct Materials Direct Labor Machine Hours

18,000 37,800 675
11,250 54,720 1,350
388,800 164,925 13,950
323,100 144,788 12,150
85,455 98,303 6,300
826,605 500,535 34,425

Problem 17

Answer
1. FOH rate = P4,320,000 / 120,000 hours = P36/mhr.
2.

1. WIP 330,000
Materials 330,000

WIP 630,000
Payroll 630,000

2. FOH control 696,000

Accumulated Dep 120,000
Wages Payable 300,000
Indirect materials 24,000
Various Accounts 252,000

3. WIP 583,200
FOH applied 583,200

4. FG 1,659,000
WIP 1,659,000
 DM DL FOH applied Beg. Bal Total
Job 101 108,000 270,000 194,400 570,000 1,142,400
Job 102 - 150,000 129,600 237,000 516,600
1,659,000

5. COGS 1,142,400
FG 1,142,400

Cash 1,290,000
Sales 1,290,000
1,142,400 + 147,600 = 1,290,000

Problem 18

Solution
1.
Total Budgeted Factory overhead 14,240,000
÷ Machine hours 1,600,000
Predetermine Factory overhead Rate 8.90

2. Job # 1 Job # 2 Job # 3

Machine Hours used 68,000 36,000 23,200
x Predetermine Factory overhead rate 8.90 8.90 8.90
Applied Factory overhead 605,200 320,400 206,480

Job # 1 Job # 2 Job # 3

Material Costs 168,000 656,000 312,000
Direct Labor Costs 128,000 104,000 144,000
Applied Factory overhead 605,200 320,400 206,480
Total Costs 901,200 1,080,400 662,480

Total
Budgeted Predetermine
3. Budgeted FOH FOH FOH rate
Materials related Machine related
Factory overhead 3,840,000 Factory overhead 10,400,000
÷ Material costs 12,800,000 ÷ Machine hours 1,600,000
Predetermine
Factory overhead Predetermine Factory
Rate 0.30 overhead Rate 6.5 6.80
 Applied Factory overhead Job # 1 Job # 2 Job # 3
Material- related (material cost x rate) 50,400 196,800 93,600
Machine related (machine hours x rate) 442,000 234,000 150,800
Total Factory overhead applied 492,400 430,800 244,400

Job # 1 Job # 2 Job # 3

Material Costs 168,000 656,000 312,000
Direct Labor Costs 128,000 104,000 144,000
Applied Factory overhead:
Material- related (material cost x rate) 50,400 196,800 93,600
Machine related (machine hours x rate) 442,000 234,000 150,800
Total Costs 788,400 1,190,800 700,400

Problem 19
Req 1.
WIP beg (8K + 4K +6K) 18,000
DM 52,000
DL 40,000
FOH applied (40K x 150%) 60,000
Total 170,000
Less: WIP end
DM 5,600
DL 3,600
FOH (3,600 x 150%) 5,400
COGM 155,400

Req. 2: FOH applied 60K – Actual FOH 64K = 4,000 under applied

Problem 20
Req. 1
Rm beg. 7,250
RM Purchased 50,000
Total 57,250
RM end (12,250)
Indirect Materials used (45,000 x 15%) (6,750)
Direct Materials used 38,250

Req. 2 & 3
Job 10 Job 11 Job 12 Total
Beg. Balance 6,500 4,900 - 11,400
DM (Job 10 - 20%; Job 11 - 25% and Job 12 - 40%) 9,000 11,250 18,000 38,250
DL 15,000 21,000 30,000 66,000
FOH applied (1,680 FOH / 2,100 DL) = 80% of DL 12,000 16,800 24,000 52,800
Total 42,500 53,950 72,000 168,450
 WIP beg 11,400
DM used 38,250
DL 66,000
FOH applied 52,800
Total 168,450
WIP end - Job 12 (72,000)
COGM 96,450
FG beg 2,300
TGAS 98,750
FG end 2,300
COGS - Job 10 & 11 (42,500 + 53,950) (96,450)

Problem 21
Decrease in direct materials during the year 500,000
Add: Labor cost during the year 400,000
Add: Actual factory overhead during the year 300,000
Total manufacturing costs during the year 1,200,000
Less: Increase in work in process during the year ( 200,000)
Cost of goods manufactured during the year 1,000,000

Problem 22
Work in process beg
Job 101 130,000
Job 102 90,000 220,000
Add: Total Manufacturing cost
DM 130,000
DL 700,000
FOH (50% of 700,000) 350,000 1,180,000
Total cost of goods put into process 1,400,000
Less: Work in process end
Job 103:
DM 100,000
DL 400,000
FOH (50% of 400,000) 200,000 700,000
Cost of Goods Manufactured 700,000
Add: FG beg. -
TGAS 700,000
FG end
Job 102:
Beg 90,000
DM 10,000
DL 200,000
FOH (50% of 200,000) 100,000 400,000
GOGS 300,000