P15-1A (page 828)
Deglman Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of January, Deglman Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $90,000 on account.
2. Incurred factory labor costs of $70,000. Of this amount $16,000 related to employer
3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect
labor $20,000; depreciation expense on equipment $19,000; and various other
manufacturing overhead costs on account $16,000.
4. Assigned direct materials and direct labor to jobs as follows.
Job No. Direct Materials Direct Labor
50 $10,000 $ 5,000
51 39,000 25,000
52 30,000 20,000
(a) Calculate the predetermined overhead rate for 2012, assuming Deglman Manufacturing
estimates total manufacturing overhead costs of $980,000, direct labor costs
of $700,000, and direct labor hours of 20,000 for the year.
(b) Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the
job cost sheet for Job No. 50.
(c) Prepare the journal entries to record the purchase of raw materials, the factory labor
costs incurred, and the manufacturing overhead costs incurred during the month of
(d) Prepare the journal entries to record the assignment of direct materials, direct labor,
and manufacturing overhead costs to production. In assigning manufacturing overhead
costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets
(e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal
entry (or entries) to record the completion of any job(s) during the month.
(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the
(g) What is the balance in the Finished Goods Inventory account at the end of the month?
What does this balance consist of?
(h) What is the amount of over- or underapplied overhead?
P16-1A (page 878)
Conwell Company manufactures its product, Vitadrink, through two manufacturing
processes: Mixing and Packaging. All materials are entered at the beginning of
each process. On October 1, 2012, inventories consisted of Raw Materials $26,000, Work
in Process—Mixing $0, Work in Process—Packaging $250,000, and Finished Goods
$289,000. The beginning inventory for Packaging consisted of 10,000 units that were 50%
complete as to conversion costs and fully complete as to materials. During October, 50,000
units were started into production in the Mixing Department and the following transactions
1. Purchased $300,000 of raw materials on account.
2. Issued raw materials for production: Mixing $210,000 and Packaging $45,000.
3. Incurred labor costs of $258,900.
4. Used factory labor: Mixing $182,500 and Packaging $76,400.
5. Incurred $810,000 of manufacturing overhead on account.
6. Applied manufacturing overhead on the basis of $24 per machine hour. Machine
hours were 28,000 in Mixing and 6,000 in Packaging.
7. Transferred 45,000 units from Mixing to Packaging at a cost of $979,000.
8. Transferred 53,000 units from Packaging to Finished Goods at a cost of $1,315,000.
9. Sold goods costing $1,604,000 for $2,500,000 on account.
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