# Chapter 3

Pages: 26 (1572 words) Published: March 12, 2014
﻿Chapter 3

Exercise 3-1 (10 minutes)
The estimated total manufacturing overhead cost is computed as follows:

Y = \$466,000 + (\$3.00 per DLH)(40,000 DLHs)

\$466,000

\$3.00 per DLH × 40,000 DLHs
120,000

\$586,000

The predetermined overhead rate is computed as follows:

\$586,000

÷ Estimated total direct labor hours (DLHs)
40,000
DLHs
\$14.65
per DLH

Exercise 3-2 (10 minutes)
Actual direct labor-hours
12,600
\$23.10
\$291,060

Exercise 3-3 (10 minutes)
1.Total direct labor-hours required for Job A-200:

Direct labor cost
\$120
÷ Direct labor wage rate per hour
\$12
= Total direct labor hours
10

Total manufacturing cost assigned to Job A-200:

Direct materials
\$200
Direct labor
120
(\$18 per DLH × 10 DLHs)
180
Total manufacturing cost
\$500

2.Unit product cost for Job A-200:

Total manufacturing cost
\$500

÷ Number of units in the job
50
= Unit product cost
\$10

Exercise 3-6 (20 minutes)
1.
Cost of Goods Manufactured

Direct materials:

Raw materials inventory, beginning
\$24,000

53,000

Total raw materials available
77,000

Deduct: Raw materials inventory, ending
6,000

Raw materials used in production
71,000

Deduct: Indirect materials included in manufacturing overhead   8,000
\$ 63,000

Direct labor

62,000

Manufacturing overhead applied to work in process inventory

41,000

Total manufacturing costs

166,000

Add: Beginning work in process inventory

41,000

207,000

Deduct: Ending work in process inventory

38,000

Cost of goods manufactured

\$169,000

2.
Cost of Goods Sold

Finished goods inventory, beginning
\$ 86,000

169,000

Cost of goods available for sale
255,000

Deduct: Finished goods inventory, ending
93,000

162,000

8,000

\$170,000

Exercise 3-7 (10 minutes)
1.
Actual direct labor-hours
8,250

\$21.40

\$176,550

172,500

\$   4,050

2.Because manufacturing overhead is overapplied, the cost of goods sold would decrease by \$4,050 and the gross margin would increase by \$4,050. Exercise 3-8 (30 minutes)
1.
Cost of Goods Manufactured

Direct materials:

Raw materials inventory, beginning
\$  8,000

132,000

Total raw materials available
140,000

Deduct: Raw materials inventory, ending
10,000

Raw materials used in production

130,000

Direct labor

90,000

Manufacturing overhead applied to work in process inventory

210,000

Total manufacturing costs

430,000

Add: Beginning work in process inventory

5,000

435,000

Deduct: Ending work in process inventory

20,000

Cost of goods manufactured

\$415,000

2.
Cost of Goods Sold

Finished goods inventory, beginning
\$ 70,000

415,000

Cost of goods available for sale
485,000

Deduct: Finished goods inventory, ending
25,000

460,000

10,000

\$470,000

3.
Eccles Company
Income Statement

Sales

\$643,000
Cost of goods sold (\$460,000 + \$10,000)

470,000
Gross margin

173,000