Make the necessary journal entries to charge the costs

Reference no: EM131887753

Exercise 1 - Calwell Corp. uses a job order costing system. Four jobs were started during the current year. The following is a record of the costs incurred:

Job #	Material Used	Direct Labor Used	Direct Labor Hours Used
1010	$45,000	$72,000	8,000
1011	59,000	77,000	7,000
1012	35,000	30,000	3,000
1013	26,000	40,000	5,000

Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013 were sold for $387,000. Assuming that this is Calwell's first year of operations:

(a) Make the necessary journal entries to charge the costs to the jobs started and to record the completion and sale of finished jobs.

(b) Calculate the balance in the Work in Process Inventory, Finished Goods Inventory, and Factory Overhead accounts. Does the Factory Overhead account balance indicate an over- or underapplied overhead?

Exercise 2 - Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing.

Beginning Work in Process inventory:

Physical units................................................... 5,000 units

% complete for materials..................................... 70%

% complete for labor and overhead......................... 25%

Materials cost from May...................................... $7,350

Labor and overhead cost from May......................... $3,125

Product started and completed:

Physical units................................................... 40,000 units

Ending Work in Process inventory:

Physical units.................................................... 4,000 units

% complete for materials..................................... 40%

% complete for labor and overhead ......................... 10%

Manufacturing costs for June:

Materials......................................................... $96,975

Labor and overhead............................................. $79,470

Compute equivalent units for direct materials, direct labor and overhead for June.

Exercise 3 - Fischer Company identified the following activities, costs, and activity drivers:

Activity	Expected Costs	Expected Activity
Handling parts	$425,000	25,000 parts in stock
Inspecting product	$390,000	940 batches
Processing purchase orders	$220,000	440 orders
Designing packaging	$230,000	5 models

a. Compute a plant-wide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).

b. Compute separate rates for each of the four activities using the activity-based costing.

Exercises 4 - Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below.

Direct materials	$450,000
Direct labor
Department A (7,000 DLH x $21 per DLH)	$147,000
Department B (25,000 DLH x $19 per DLH)	$475,000
Department C (10,000 DLH x $26 per DLH)	$260,000
Machine hours
Department A	42,000 MH
Department B	23,000 MH
Department C	38,000 MH

Freeze Frame's total expected overhead costs and related overhead data are shown below:

	Department A	Department B	Department C
Direct labor hours	90,000 DLH	75,000 DLH	42,000 DLH
Machine hours	67,500 MH	135,000 MH	53,200 MH
Manufacturing overhead costs	$540,000	$675,000	$399,000

a. Compute a departmental overhead rate for department A based on direct labor hours.

b. How much overhead is associated with model 789 from department A?

c. Compute a departmental overhead rate for department B based on direct labor hours.

d. How much overhead is associated with model 789 from department B?

e. Compute a departmental overhead rate for department C based on direct labor hours.

f. How much overhead is associated with model 789 from department C?

g. What is the per unit cost of the 550,000 units of model 789?

Exercise 5 - Magnolia Company is considering the production and sale of a new product with the following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs, $399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.

(a) Calculate break-even in units.

(b) Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).

(c) Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.

(d) Calculate dollar sales that would be needed to generate the same profit as above.

(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.

Be sure to label each calculation and show all calculations.

Reference no: EM131887753

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