Dr.Z.

Z COST CH1

Solutions for Exercises

1.1 a. $258,714 + 309,167 + 140,281 = $708,162 Total Manufacturing Costs

b. $705,226 (Amount credited to the Work in Process account)
c. $84,390 + 258,714 + 309,167 + 140,281 - 705,226
= $87,326 Ending inventory balance

1.2 a. Production
b. Procurement
c. Selling
d. Production
e. Warehousing
f. Procurement
g. Selling
h. Production
i. Procurement

1.3 a. Direct Materials $70,420

Direct Labor 87,953
Manufacturing Overhead 42,230
Manufacturing Costs for Year $200,603
Work in Process, January 1 39,490
Total $240,093
b. Work in Process, December 31 35,620
Cost of Goods Manufactured $204,473

1.4 a. Finished Goods, April $98, 480

Cost of Goods Manufactured 135,705
Total Available $234,185
Less Finished Goods, April 30 94,290
Cost of Goods Sold $139,895

b. Net Sales $170,920

Less Cost of Goods Sold 139,895
Gross Profit $31,025

1.5 a. Cost of Goods Manufactured:

Raw Materials January 1, 2006 $448,543
Raw Material Purchases 731,917
Total Raw Materials Available $1,180,460
Less Raw Materials Dec, 31, 2006 461,417
Raw Materials used $ 719,043
Direct Labor 1,182,680
Manufacturing Overhead 814,530
Total Manufacturing Costs $2,716,253
Add Work in Process, Jan 1, 2006 383,463
$3,099,716

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Dr.Z.Z COST CH1

Less Work in Process, Dec 31, 2006 498,182

Total Cost of Goods Manufactured $2,601,534

b. Net Sales $4,708,917

Cost of Goods Sold:
Finished Goods, January 1, 2006 321,932
Cost of Goods Manufactured 2,601,534
Total Goods Available for Sale $2,923,466
Less Finished Goods, Dec 31, 2006 301,647
Cost of Goods Sold: $2,621,819
c. Gross Profit $2,087,098

1.6 The description of each transaction follows:

A. Raw materials are purchased on account.
B. Direct materials of $26,000 and indirect materials of $2,000 were used
and charged to Work in Process and Manufacturing Overhead Control.
C. Factory wages of $33,000 were earned and charged to Factory Payroll
Clearing.
D. Direct labor of $25,000 and indirect labor of $8,000 were used and
charged to Work in Process and Manufacturing Overhead Control.
E. Manufacturing Overhead Control was debited for the cost of other
overhead incurred.
F. Manufacturing Overhead of $14,200 was applied to jobs.
G. Goods costing $58,500 were completed and transferred to Finished
Goods.
H. Cost of goods sold during the month was $49,700.The cost was
transferred from the Finished Goods account to the Cost of Goods Sold
account.

1.7 a. Direct Materials $250,280

Direct Labor 391,320
Prime Cost $641,600

Direct Labor $391,320

Manufacturing Overhead 222,492
Conversion Costs $613,812

1.8 a. Raw Materials, Beginning Inv. $ 450,933

Purchases 962,091
Raw Materials Available for Use $1,413,024

b. Raw Materials Available for Use $1,413,024

Less Raw Materials Ending Inventory 438,946
Raw Materials Used $ 974,078

c. Raw Materials Used $974,078

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Dr.Z.Z COST CH1

Less Indirect Materials Used 73,170

Direct Materials Used $900,908

1.9 Overapplied. The credit was $3,243 more than the total debits.

1.10 (A) $18,758, $9,822

(B) $109,933, $109,483
(C) $81,644, $18,116
Problem 1-1A

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Dr.Z.Z COST CH1

GENERAL JOURNAL Page _______

POST.
DATE DESCRIPTION OF ENTRY DEBIT CREDIT
REF.
200
6
Aug. 3 Raw Materials 1 8 2 4 6 0 0
1 0
Vouchers Payable 1 8 2 4 6 0 0
Recorded cost of raw materials purchased during the 0
month.
3 Work in Process 1 2 0 2 9 00
1 Manufacturing Overhead 2 4 6 3 00
Control
Raw Materials 0 1 4 4 9 2 0 0
Recorded cost of raw materials used during the 0
month.
3 Factory Payroll Clearing 9 2 7 4 00
1 0
Salaries and Wages Payable 9 2 7 4 00
Recorded factory payroll for the 0
month.
3 Work in Process 7 7 8 2 00
1
Manufacturing Overhead 1 4 9 2 00
Control
Factory Payroll Clearing 0 9 2 7 4 00
Recorded cost of labor used in operations during the 0
month.
3 Manufacturing Overhead 2 2 8 0 00
1 Control 0
Vouchers Payable* 2 2 8 0 00
Recorded other overhead costs incurred during the 0
month.*Occasionally, other accounts are
credited.
3 Manufacturing Overhead 3 0 4 9 00
1 Control 0
Accumulated Depreciation Factory Building 3 0 4 9 00
Recorded depreciation for the 0
month.
3 Manufacturing Overhead 7 4 8 00
1 Control 0
Accumulated Depreciation Factory Equipment 7 4 8 00
Recorded depreciation for the 0
month.
3 Work in Process 7 9 4 2 30
1 0
Manufacturing Overhead 7 9 4 2 30
Control
Recorded overhead applied to jobs during the 0
month.
3 Finished Goods 2 8 1 4 6 00
1 0
Work in Process 2 8 1 4 6 00
Transferred cost of jobs completed during the 0
month.
3 Cost of Goods Sold 1 9 8 1 5 00
1 0
Finished Goods 1 9 8 1 5 00
Recorded cost of goods sold during the 0
month.
3 Accounts Receivable 2 9 7 2 2 50
1 0
Sales 2 9 7 2 2 50
Recorded sales of finished goods during the 0
month.

Problem 1-2A

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Dr.Z.Z COST CH1

Gardner Manufacturing
Statement of Cost of Goods
Corporation
Manufactured June 30, 2006
Year Ended
Raw Materials
Raw Materials Inventory, July 1, 2006 60 0 0 00
Material 203 6 0 00
Total Materials Available
Purchases 263 6 0 0
00
Less Raw Materials Inventory, June 30, 2007 52 0 0 0
00
Raw Materials Used 211 6 0 00
0
Direct Labor 118 2 0 00
0
Manufacturing 0
Indirect Materials and
Overhead 154 8 00
Indirect
SuppliesLabor 110 8 0 00
Payroll Taxes Expense-Factory 98 0 0 00
Utilities 164 0 00 0
Repairs and 42 0 00 0
DepreciationFactory
Maintenance Equipment 51 0 00 0
Insuranc 24 6 00 0
RentFactory
e Building 570 0 00 0
Total Manufacturing Overhead 0 121 5 2 00
Total Manufacturing Costs 451 3 2 00
0
Add Work in Process Inventory, July 1, 2006 24 6 0 00
0
Total Manufacturing Costs to Account For 475 9 2 0
00
Less Work in Process Inventory, June 30, 2007 26 0 0 0
00
Cost of Goods 449 9 2 00
0
Manufactured 0

Note: In this instance, Indirect Materials and Supplies are

not
included in the Raw Materials Inventory.

Problem 1-3A

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Dr.Z.Z COST CH1

Clayton Company
Statement of Cost of Goods
Manufactured
Year Ended September 30, 2007

Raw Materials
Raw Materials Inventory, Oct 1, 2006 1 4 7 0 0 0 0
Materials 2 8 4 0 0 0 0
0
Purchases
Total Materials Available 4 3 1 0 0 0 0
0
Less Raw Materials Inventory, Sept 30, 2007 1 3 6 0 0 0 0
0
Raw Materials Used 2 9 5 0 0 0 0
0
Direct Labor 2 3 6 0 0 0 0
0
Manufacturing 0
Overhead
Indirect Materials and 4 7 0 0 0 0
Supplies
Indirect Labor 8 4 0 0 0 0
0
Other Manufacturing 0
1 5 7 0 0 0 0
Overhead
Total Manufacturing Overhead 0 2 8 8 0 0 0 0
Total Manufacturing Costs 8 1 9 0 0 0 0
0
Add Work in Process Inventory, Oct 1, 2006 1 1 8 0 0 0 0
0
Total Manufacturing Costs to Account for 9 3 7 0 0 0 0
0
Less Work in Process Inventory, Sept 30, 2007 1 2 2 0 0 0 0
0
Costs of Goods 8 1 5 0 0 0 0
0
Manufactured 0
Clayton Company
Income
Statement
Year Ended September 30, 2007

Revenu
e Sales 1 4 6 0 0 0 0
Costs of Goods Sold 2 0
Finished Goods Inventory, Oct 1, 2006 2 0 0 0 0 0
Add Cost of Goods Manufactured 8 1 5 0 0 0 0
0
Total Goods Available for Sale 8 3 5 0 0 0 0
0
Less Finished Goods Inventory, Sept 30, 2007 2 5 0 0 0 0
0
Cost of Goods Sold 0 8 1 0 0 0 0 0
Gross Profit on Sales 4 3 6 0 0 0 0
0
Operating Expenses 0
Selling Expenses 2 6 5 0 0 0 0
Administrative Expenses 8 7 0 0 0 0
0
Total Operating Expenses 0 3 5 2 0 0 0 0
Net Income from 0
8 4 0 0 0 0
Operations 0

Problem 1-4A

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Dr.Z.Z COST CH1

Problem 1-4A (continued)

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Dr.Z.Z COST CH1

Problem 1-5A

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Dr.Z.Z COST CH1

Problem 1-5A (continued)

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Dr.Z.Z COST CH1

GENERAL JOURNAL Page 7

POST.
DATE DESCRIPTION OF ENTRY DEBIT CREDIT
REF.
200
6
July 3 Accounts Receivable 11 3 8 2 2 5 7 0
1 Sales 1
40 0 3 8 2 2 5 7 0
Recorded sales of finished goods during the 1 0
month.

Accounts Receivable No. 111

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J7 3 8 2 2 5 7 0 3 8 2 2 5 7 0 DR
1 0 0

Raw Materials No. 121

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6 3 Balance
July 8 6 2 8 0 0 DR
1
3 J6 1 0 2 3 4 0 0 1 8 8 6 2 0 0
0 DR
1
3 J6 0 1 0 9 7 2 0 0 7 8 9 0 0 0
0 DR
1 0 0

Work in Process No. 122

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 Balance 6 8 8 3 7 0 DR
1
3 J6 8 3 0 0 5 0 1 5 1 8 4 2 0
0 DR
1
3 J6 1 0 4 6 2 0 0
0 2 5 6 4 6 2 0
0 DR
1
3 J6 0
8 7 8 2 9 0 0
3 4 4 2 9 1 0 DR
1
3 J6 0 2 7 1 7 8 3 0 0
7 2 5 0 8 0 DR
1 0 0

Finished Goods No. 126

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 Balance 4 2 0 9 0 0 DR
1
3 J6 2 7 1 7 8 3 0 3 1 3 8 7 3 0
0 DR
1
3 J6 0 2 7 5 3 3 3 0 3 8 5 4 0 0
0 DR
1 0 0

Problem 1-5A (continued)

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Dr.Z.Z COST CH1

Vouchers Payable No. 201

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J6 1 0 2 3 4 0 0 1 0 2 3 4 0 0 CR
1
3 J6 0
2 9 5 6 8 0 0
1 3 1 9 0 8 0 CR
1 0 0

Salaries and Wages Payable No. 202

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J6 1 3 8 2 4 0 0 1 3 8 2 4 0 0 CR
1 0 0

Sales No. 401

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J7 3 8 2 2 5 7 0 3 8 2 2 5 7 0 CR
1 0 0

Cost of Goods Sold No. 415

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J6 2 7 5 3 3 3 0 2 7 5 3 3 3 0 DR
1 0 0

Factory Payroll Clearing No. 500

POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J6 1 3 8 2 4 0 0 1 3 8 2 4 0 0 DR
1
3 J6 0 1 3 8 2 4 0 0 00
1 0
Manufacturing Overhead No. 501
Control
POST. DR.
DATE EXPLANATION DEBIT CREDIT BALANCE
REF. CR.
200
6
July 3 J6 2 6 7 1 5 0 2 6 7 1 5 0 DR
1
3 J6 0
3 3 6 2 0 0 0
6 0 3 3 5 0 DR
1
3 J6 0
2 9 5 6 8 0 0
8 9 9 0 3 0 DR
1
3 J6 0 8 7 8 2 9 0 2 0 7 4 0
0 DR
1 0 0

Problem 1-5A (continued)

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Dr.Z.Z COST CH1

Problem 1-5A (continued)

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Dr.Z.Z COST CH1

Consolidated Lamp Company

Income
Statement
Month Ended July 31, 2006

Revenu
e Sales 3 8 2 2 5 70
Costs of Goods Sold 0
Finished Goods Inventory, July 1, 2006 4 2 0 9 00
Add Cost of Goods Manufactured 0
2 7 1 7 8 30
Total Goods Available for Sale 0
3 1 3 8 7 30
Less Finished Goods Inventory, July 31, 2006 0
3 8 5 4 00
Cost of Goods Sold 0 2 7 5 3 3 30
Gross Profit on Sales 0
1 0 6 9 2 40
Operating Expenses 0
Selling Expenses 4 9 7 4 10
Administrative Expenses 0
2 1 8 0 00
Total Operating Expenses 0 7 1 5 4 10
Net Income Before Income Taxes 0
3 5 3 8 30
Provision for Income Taxes 0
1 4 1 5 30
Net Income After Income Taxes 0
2 1 2 3 00
0

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