Milano’s Specialty Clothing, Inc., uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $82,250 Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,500 Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000 Accounts payable (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,000 Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None The following transactions were completed during the month of November: a. Materials purchases on account during the month, $74,000. b. Materials requisitioned during the month: 1. Direct materials, $57,000. 2. Indirect materials, $11,000. c. Direct materials returned by factory to storeroom during the month, $1,100. d. Materials returned to vendors during the month prior to payment, $2,500. e. Payments to vendors during the month, $68,500. Required: 1. Prepare general journal entries for each of the transactions. 2. Post the general journal entries to T-accounts. 3. Balance the accounts and report the balances of November 30 for the following: a. Cash b. Materials c. Accounts payable
> The payroll records of XU Corporation for the week ending October 7, the fortieth week in the year, show the following: Required: 1. Complete a work sheet with the following column headings: Employee 3 columns for Earnings for Week: . Use one for Regula
> The books of Prestige Products Company revealed that the following general journal entry had been made at the end of the current accounting period: Factory Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 Und
> Match each of the following cost pools with the most appropriate cost allocation base and determine the overhead rates: Cost Pool Amount Assembly support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
> Job 401k required $5,000 for direct materials, $2,000 for direct labor, 200 direct labor hours, 100 machine hours, two setups, and three design changes. The cost pools and overhead rates for each pool follow: Cost Pool Overhead Rate Assembly support $5/
> a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials used totaled $5,000 and that the direct labor cost to
> A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next year’s ope
> What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments? a. Building maintenance b. Inspection and packing c. Machine repair d. Human resources e. Purchasing f. Shipping g. Raw m
> What purpose do digital records and remote computer terminals serve in a payroll system?
> How does the just-in-time approach to production differ from the traditional approach?
> Briefly stated, what are the advantages and disadvantages of (a) the hourly rate wage plan and (b) the piece-rate wage plan?
> What is the difference between direct and indirect labor?
> The general ledger of Smokey Mountain Mfg., Inc., showed the following credit balances on January 15: FICA Tax Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100.00 Employees Income Tax Payable .
> What are the two alternatives for accounting for the fringe benefits of direct laborers?
> a. Distinguish between defined benefit pension plans and defined contribution pension plans. b. Distinguish between contributory and noncontributory pension plans.
> What is a shift premium, and how is it usually accounted for?
> What are the procedures involved in accounting for labor cost, and what supporting forms are used for each procedure?
> What accounts are used to record employees’ withholding taxes and the employer’s payroll taxes?
> Maintaining internal control over labor cost is necessary for a cost accounting system to function effectively. What are the internal control procedures regarding the charge to the work in process account and the credit to the payroll account in the gene
> In accounting for labor costs, what is the distinction between the accounting treatment for regular pay and overtime premium pay?
> Although payroll records may vary in design, what types of employee data would be found in the payroll records of most manufacturing companies?
> Which of the forms shown in the chapter is the source for the following entries to subsidiary ledger accounts? a. Debits in materials ledger to record materials purchased b. Credits in materials ledger to record materials requisitioned c. Debits in job
> Terri Whelan, SS# 036-47-2189, is a Grade 1 Machinist who earns $20 per hour. On Monday June 12 through Wednesday June 14, she worked four hours per day on each of Jobs 007 and 2525. On Thursday and Friday of the week, she worked six hours per day on Job
> WTA Manufacturing Company operates on a modified wage plan. During one week’s operation, the following direct labor costs were incurred: The employees are machine operators. Piece rates vary with the kind of product being produced. A m
> Why do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on both the income statement and balance sheet.
> A company may select an inventory costing method from a number of commonly used procedures. Briefly, how would you describe each of the following methods? a. First-in, first-out b. Last-in, first-out c. Moving average
> Elite Manufacturing Company uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and double-time for Saturday and Sunday. Also, a bonus of 1%
> Who originates each of the following forms? a. Purchase requisition b. Purchase order c. Receiving report d. Materials requisition e. Debit-credit memorandum
> What internal control procedures should be established for incoming shipments of materials purchased?
> The following is a list of manufacturing costs incurred by Orleans Products Co. during the month of July: Direct materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,000 Indirect materials use
> Illustrations of forms for requisitioning, ordering, and accounting for materials are presented in the chapter. Would you expect these forms, as shown, to be used by all manufacturers? Discuss.
> Purchasing agents are responsible for contacting vendors from which to purchase materials required by production. Why is the purchasing agent also responsible for reviewing and approving incoming vendors’ invoices?
> Briefly, what are the duties of the following employees? a. Purchasing agent b. Receiving clerk c. Storeroom keeper d. Production supervisor
> What are the costs associated with carrying materials in stock?
> How would you define the term economic order quantity?
> The following transactions affecting materials occurred in February: Feb. 1 Balance on hand, 1,200 ft @ $2.76, $3,312.00 (plastic tubing, materials ledger account #906). 5 Issued 60 ft to production on Materials Requisition No. 108. 11 Issued 200 ft on M
> The purchases and issues of rubber gaskets (Materials Ledger #11216) as shown in the records of HD Corporation for the month of November follow: Required: 1. Complete a materials ledger account similar to Figure 2-10 (the ‘â€
> Stacey Womack is considering the implementation of an incentive wage plan to increase productivity in her small manufacturing plant. The plant is nonunion, and employees have been compensated with only an hourly rate plan. Jane Moore, Vice President—Manu
> Cortez Chemical, Inc., requires 500 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5. Required: 1. Compute the average number of gallons in inventory. 2. Compute the total carrying cost. 3.
> Cortez Chemical, Inc., requires 20,000 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5. Determine the EOQ from potential order sizes of 300, 400, 500, 600, 700, and 800 gallons by construct
> Marino Company predicts that it will use 25,000 units of material during the year. The expected daily usage is 200 units, and there is an expected lead-time of five days and a desired safety stock of 500 units. The material is expected to cost $5 per uni
> The following inventory data relate to Niagara Corp.: Calculate the following for the year: a. Direct materials purchased. b. Direct labor costs incurred. c. Cost of goods sold. d. Gross profit. Inventories Ending Beginning Finished goods $75,000 $
> Torre, Inc., manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The following costs were determined for each motor: Materials . . . . . . . .
> One of the tennis racquets that Set Point manufactures is a titanium model (Ace) that sells for $149. The cost of each Ace consists of: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
> An examination of Frosty Corporation’s records reveals the following transactions: a. On December 31, the physical inventory of raw material was 9,950 gallons. The book quantity, using the moving average method, was 10,000 gal@ $0.52 per gal. b. Producti
> T. Hilliary, Inc., uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products. Required: 1. Prepare
> Yusane Bolts, Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in process is $1,000,000. Required: 1. Determine the th
> The following actions occurred at Sanibel Sheet Metal Company relative to accounting for materials costs for April. Mar. 31 The factory manager informs the storeroom keeper that for the month of April, 2,000 sheets of aluminum are the forecasted usage. A
> Go to the Vanguard Investments’ Web site https://retirementplans.vanguard.com/VGApp/pe/PubHome for retirement information that is linked to the text Web site at www.cengage.com/accounting/vanderbeck. Enter ‘‘401(k) plans’’ in the search area and find th
> Scarlatta’s Manufacturing Company uses a job order cost system. The following accounts have been taken from the books of the company: Required: 1. Analyze the accounts and describe in narrative form what transactions took place. 2. Lis
> In the scenario on page 91, Boston Company was trying to decide whether or not to change from a traditional inventory system to a just-in-time (JIT) system. The president, Teresa Francona, wanted to know whether this change would merely affect how goods
> Katy, Inc., manufactures ‘‘smart phones.’’ It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to $200,000 annually. Estimated benefits from the change to JIT are as follows: The quality advantages o
> The following data are taken from the general ledger and other records of Black Hills Manufacturing Co. on January 31, the end of the first month of operations in the current fiscal year: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
> Go to the text Website at http://www.cengage.com/accounting/vanderbeck and click on the link to the following article: Benefits From Lean and Cellular Manufacturing, by Strategos, Inc.-Consultants, Engineers, Strategists Required: Read the article and a
> Match the materials control form in the left column with the person responsible for its preparation in the right column. (A selection may be used more than once.) a. Purchase requisition 1. Production department supervisor b. Purchase order 2. Sto
> Patriot Company predicts that it will use 360,000 gallons of material during the year. The material is expected to cost $5 per gallon. Patriot anticipates that it will cost $72 to place each order. The annual carrying cost is $4 per gallon. a. Determine
> Aztec Company expects daily usage of 500 pounds of material Inca, an anticipated lead time of seven days, and a desired safety stock of 2,500 pounds. a. Determine the order point. b. Determine the number of pounds to be issued from safety stock if the ne
> David Mfg. Company manufactures an integrated transistor circuit board for repeat customers but also accepts special orders for the same product. Job No. MS1 incurred the following unit costs for 1,000 circuit boards manufactured: Materials . . . . . . .
> Marcia Young earns $25 per hour for up to 400 units of production per day. If she produces more than 400 units per day, she will receive an additional piece rate of $0.50 per unit. Assume that her hours worked and pieces finished for the week just ended
> Venus, Inc., manufactures tennis clothing. During the month, the company cut and assembled 8,000 skirts. One hundred of the skirts did not meet specifications and were considered ‘‘seconds.’’ Seconds are sold for $9.95 per skirt, whereas first-quality sk
> A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered that the material used was inferior to the specifications
> RDI Company uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials
> Mystic Manufacturing Company maintains the following accounts in the general ledger: Materials, Work in Process, Factory Overhead, and Accounts Payable. On June 1, the materials account had a debit balance of $5,000. Following is a summary of materials t
> Benson Company was franchised on January 1, 2011. At the end of its third year of operations, December 31, 2013, management requested a study to determine what effect different materials inventory costing methods would have had on its reported net income
> Explain in narrative form the flow of direct materials, direct labor, and factory overhead costs through the ledger accounts.
> In tabular form, compare the total materials cost transferred to Work in Process and the cost of the ending inventory for each method used in E2-6, E2-7, and E2-8. Discuss the effect that each method will have on profits, depending on whether it is a per
> Using the moving average method of perpetual inventory costing and the information presented in E2-6, compute the cost of materials used and the cost of the July 31 inventory. In E2-6 July 1 Balance on hand, 1,000 yd of linen@$4.00 each. 3 Issued 250 y
> Using last-in, first-out; perpetual inventory costing; and the information presented, compute the cost of materials used and the cost of the July 31 inventory. In E2-6 July 1 Balance on hand, 1,000 yd of linen@$4.00 each. 3 Issued 250 yd. 5 Received 500
> Using first-in, first-out; perpetual inventory costing; and the following information, determine the cost of materials used and the cost of the July 31 inventory: July 1 Balance on hand, 1,000 yd of linen@$4.00 each. 3 Issued 250 yd. 5 Received 500 yd@ $
> Using the earnings data developed in E3-1 and assuming that this was the first week of employment for A. Jolly with Pittsburgh Manufacturing Company, prepare the journal entries for the following: a. The week’s payroll. b. Payment of th
> Prepare a journal entry to record each of the following materials transactions: a. Total materials purchased on account during the month amounted to $200,000. b. Direct materials requisitioned for the month totaled $175,000. c. Indirect materials requisi
> Catskill Manufacturing, Inc., records the following use of materials during the month of June: Prepare a summary journal entry for the materials requisitions. Materials Requisitions Direct Materials Indirect Date Req. No. Use Materials 1 110 Materia
> Why is unit cost information important to management?
> How is cost accounting information used by management?
> In what ways does a typical manufacturing business differ from a merchandising concern? In what ways are they similar?
> How does the cost accounting function assist in the management of a business?
> Classify the following as direct materials, direct labor, factory overhead, or selling and administrative expense. a. Steel used in an overhead door plant. b. Cloth used in a shirt factory. c. Fiberglass used by a sailboat builder. d. Cleaning solvent f
> What is the difference between a perpetual inventory system and a periodic inventory system?
> Compare the manufacturing, merchandising, and service sectors. How do they differ as to the kinds of businesses in each category, the nature of their output, and type of inventory, if any?
> How would you describe the following accounts—Finished Goods, Work in Process, and Materials?
> A. Jolly of Pittsburgh Manufacturing Company is paid at the rate of $20 an hour for an 8-hour day, with time-and-a-half for overtime and double-time for Sundays and holidays. Regular employment is on the basis of 40 hours a week, five days a week. At the
> How does the computation of cost of goods sold for a manufacturer differ from that of a merchandiser?
> How is cost accounting related to: financial accounting? Managerial accounting?
> If the factory operations and selling and administrative offices are housed in the same building, what would be a good cost allocation basis to use in dividing the depreciation expense between the two areas? Why would it be important to make this allocat
> What are standard costs, and what is the purpose of a standard cost system?
> Name five key elements of the Sarbanes-Oxley Act.
> What are the advantages of accumulating costs by departments or jobs rather than for the factory as a whole?
> When is process costing appropriate, and what types of businesses use it?
> The following data were taken from the general ledger and other data of Thomas Manufacturing on July 31: Finished goods, July 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,000 Cost of goods manufacture
> When is job order costing appropriate, and what types of businesses use it?
> What circumstances created the need for the Sarbanes-Oxley Act, and how are CEOs and CFOs affected by it?
> Clark Kent earns $800 per week for a five-day week, and he is entitled to 12 paid holidays and four weeks of paid vacation. a. Over how many weeks should the holiday pay and vacation pay be expensed? b. What is the amount of the total holiday pay, and h
> What actions should a CMA take when the established policies of the organization do not resolve an ethical conflict?
> How is effective control achieved in a manufacturing concern?
> For a manufacturer, what does the planning process involve, and how is cost accounting information used in planning?
> Distinguish prime cost from conversion cost. Does prime cost plus conversion cost equal the total manufacturing cost?
> How would you define the following costs: direct materials, indirect materials, direct labor, indirect labor, and factory overhead?
> Selected account balances and transactions of Alpine Manufacturing Co. follow: May Transactions: a. Purchased raw materials and factory supplies on account at costs of $45,000 and $10,000, respectively. (One inventory account is maintained.) b. Incurre
> The post-closing trial balance of Beamer Manufacturing Co. on April 30 is reproduced as follows: During the month of May, the following transactions took place: a. Purchased raw materials at a cost of $45,000 and general factory supplies at a cost of $1
> The adjusted trial balance for Indy Furniture Company on November 30, the end of its first month of operation, is as follows: The general ledger reveals the following additional data: a. There were no beginning inventories. b. Materials purchases durin
> The following data were taken from the general ledger of Thornton Merchandisers on January 31, the end of the first month of operations in the current fiscal year: Merchandise inventory, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
