Chapter 5 Homework

Chapter 5 Homework


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Developing and Using a Predetermined Overhead Rate
Assume that the following predictions were made for 2009 for one of the plants of Milliken & Company:

Total manufacturing overhead for the year $44,000,000
Total machine hours for the year 2,000,000


Actual results for February 2009 were as follows:

Manufacturing overhead $5,480,000
Machine hours 310,000


(a) Determine the 2009 predetermined overhead rate per machine hour.

(b) Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February.

(c) As of February 1, actual overhead was underapplied by $500,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February.


Analyzing Activity in Inventory Accounts
Selected data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:

Raw materials used $300,000
Total manufacturing costs charged to production during the year
(includes raw materials, direct labor, and manufacturing overhead
applied at a rate of 60 percent of direct labor costs)
Cost of goods available for sale 826,000
Selling and general expenses 30,000


Beginning Ending
Raw materials $70,000 $80,000
Work-in-process 85,000 30,000
Finished goods 90,000 110,000


Determine each of the following:

(a) Cost of raw materials purchased

(b) Direct labor costs charged to production

(c) Cost of goods manufactured

(d) Cost of goods sold


Minot Processing Company manufactures one product on a continuous basis in two departments, Processing and Finishing. All materials are added at the beginning of work on the product in the Processing Department. During December 2009, the following events occurred in the Processing Department:

Units started 16,000 units
Units completed and transferred to Finishing Department 15,000 units
Costs assigned to processing:
Raw materials (one unit of raw materials
for each unit of product started)
Manufacturing supplies used 18,000
Direct labor costs incurred 51,000
Supervisors’ salaries 12,000
Other production labor costs 14,000
Depreciation on equipment 6,000
Other production costs 18,000

Additional information follows:

Minot uses weighted average costing and applies manufacturing overhead to Work-in-Process at the rate of 100 percent of direct labor cost.

Ending inventory in the Processing Department consists of 3,000 units that are one-third converted.

Beginning inventory contained 2,000 units, one-half converted, with a cost of $41,500 ($29,900 for materials and $11,600 for conversion).

(a) Prepare a cost of production report for the Processing Department for December.

Minot Processing Company: Processing Department
Cost of Production Report
For the Month Ending December 31, 2009
Summary of units in process:
Beginning Answer
Units started Answer
In process Answer
Completed Answer
Ending Answer
Equivalent units in process: Materials Conversion Total
Units completed Answer Answer
Plus equivalent units in ending inventory Answer Answer
Equivalent units in process Answer Answer
Total cost to be accounted for and
cost per equivalent unit in process:
Beginning work-in-process $Answer $Answer $Answer
Current costs Answer Answer Answer
Total cost in process $Answer $Answer $Answer
Equivalent units in process ÷Answer ÷Answer
Cost per equivalent unit in process $Answer $Answer $Answer
Accounting for total costs:
Transferred out $Answer
Ending work-in-process:
Materials $Answer
Conversion Answer Answer
Total cost accounted for $Answer

(b) Prepare an analysis of all changes in Work-in-Process.


Beginning $Answer
Current manufacturing costs:
Direct materials $Answer
Direct labor Answer
Applied overhead Answer Answer
Total $Answer
Cost of goods manufactured Answer
Ending $Answer