Ciolino Co.’s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000.

Ciolino Co.’s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow.

 

                                                  Job 306                                    Job 307                                    Job 308

Balances on March 31

Direct materials ............                       $ 29,000                      $ 35,000         

Direct labor ...............              20,000                         18,000

Applied overhead ..........         10,000                         9,000

Costs during April

Direct materials ............                       135,000                                   220,000                                   $100,000

Direct labor ...............              85,000                         150,000                                   105,000

Applied overhead ..........         ?                                  ?                                  ?

Status on April 30 ............       Finished (sold)             Finished (unsold)         In process

 

Required

1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).

2. Prepare journal entries for the month of April to record the following.

a. Materials purchases (on credit), factory payroll (paid in cash), and actual overhead costs including indirect materials and indirect labor. (Factory rent and utilities are paid in cash.)

b. Assignment of direct materials, direct labor, and applied overhead costs to the Goods in Process Inventory.

c. Transfer of Jobs 306 and 307 to the Finished Goods Inventory.

d. Cost of goods sold for Job 306.

e. Revenue from the sale of Job 306.

f. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

3. Prepare a manufacturing statement for April (use a single line presentation for direct materials and show the details of overhead cost).

4. Compute gross profit for April. Show how to present the inventories on the April 30 balance sheet.

 

Analysis Component

5. The over- or underapplied overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts business decision making regarding individual jobs or batches of jobs.

 

TUTORIAL PREVIEW

Problem 2-1A

Part 1

Total manufacturing costs and the costs assigned to each job

		306		307		308		April Total
	From March
	Direct materials		$  29,000		$  35,000
	Direct labor		20,000		18,000
	Applied overhead*		10,000		9,000

 

File name: Ciolino Cos.doc File type: doc PRICE: $8

ACC 561 Week 6 E20-3 E22-1 BE23-3 BE23-4 BE23-6

ACC 561 Week 6

 

ACC 561 Week 6 E20-3 E22-1 BE23-3 BE23-4 BE23-6

 

E20-3 Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department      Quarter 1         Quarter 2         Quarter 3         Quarter 4 

Auditing           2,400               1,860               2,310               2,680

Tax                  3,360               2,800               2,240               2,820

Consulting       1,730               1,730               1,730               1,730

 

Average hourly billing rates are: auditing $83, tax $93, and consulting $105.

 

Instructions

Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue

 

E22-1 Stanton Company is planning to produce 1,400 units of product in 2012. Each unit requires 3.50 pounds of materials at $7.00 per pound and a half-hour of labor at $12.60 per hour. The overhead rate is 40% of direct labor.

 

Instructions

(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.

(b) Compute the standard cost of one unit of product.

 

BE23-3 In Harley Company, it costs $29 per unit ($20 variable and $9 fixed) to make a product that normally sells for $52. A foreign wholesaler offers to buy 3,180 units at $26 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity, prepare an incremental analysis that indicates the net income (loss) Harley would realize by accepting the special order. Should the order be accepted?

 

BE23-4 Vintech Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 19,700 of the part at $5.90 per unit. If the offer is accepted, Beamer will save all variable costs but no fixed costs.

 

Prepare an analysis showing the total cost saving, if any, Beamer will realize by buying the part. What should they do?

 

BE23-6 Ridley Company has a factory machine with a book value of $97,200 and a remaining useful life of 4 years. A new machine is available at a cost of $190,800. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $556,000 to $402,200.

Prepare an analysis showing whether the old machine should be retained or replaced.

 

TUTORIAL PREVIEW

	Retain Equipment	Replace Equipment	Net 4-Year Income Increase (Decrease)
Variable manufacturing costs	2,224,000	1,608,800	615,200

 

File name: ACC 561 Week 6.doc File type: doc PRICE: $10

On April 1, 2014, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97.

On April 1, 2014, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97.

 

P14-7 Seminole Company

 

P14-7 (Entries for Life Cycle of Bonds) On April 1, 2014, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2015, Seminole took advantage of favorable prices of its stock to extinguish 6,000 of the bonds by issuing 200,000 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $31 per share on March 1, 2015.

 

Instructions

Prepare the journal entries needed on the books of Seminole Company to record the following.

(a)    April 1, 2014: issuance of the bonds.

(b)   October 1, 2014: payment of semiannual interest.

(c)    December 31, 2014: accrual of interest expense.

(d)    March 1, 2015: extinguishment of 6,000 bonds. (No reversing entries made.)

 

TUTORIAL PREVIEW

P14-7

(a)	01/04/2014	Cash (15,000 X $1,000 X 97%)	14,550,000
		Discount on Bonds Payable	450,000
		Bonds Payable		15,000,000

 

File name P14-7 Seminole Company.xls File type: xls PRICE: $6

Presented below are selected transactions on the books of Simonson Corporation.

P14-6 (Issuance of Bonds between Interest Dates, Straight-Line, Redemption) Presented below are selected transactions on the books of Simonson Corporation.

 

P14-6 Simonson Corporation

 

01-May-14

Dec. 31

Jan. 1, 2015 April 1

Dec. 31

 

Instructions

Bonds payable with a par value of $900,000, which are dated January 1, 2014, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, 2024. (Use interest expense account for accrued interest.) Adjusting entries are made to record the accrued interest on the bonds, and the amortiza- tion of the proper amount of premium. (Use straight-line amortization.) Interest on the bonds is paid. Bonds with par value of $360,000 are called at 102 plus accrued interest, and redeemed. (Bond premium is to be amortized only at the end of each year.) Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized. (Round to two decimal places.)

 

Prepare journal entries for the transactions above.

 

TUTORIAL PREVIEW

P14-6

01-May-14	Cash  ($900,000 X 106%) + ($900,000 X 12% X 4/12)	990,000
	Bonds Payable		900,000.00
	Premium on Bonds Payable		54,000.00
	Interest Expense ($900,000 X 12% X 4/12)		36,000.00

 

File name P14-6 Simonson.xls File type: doc PRICE: $8

In each of the following independent cases the company closes its 5 books on December 31.

In each of the following independent cases the company closes its 5 books on December 31.

P14-5 (Comprehensive Bond Problem) In each of the following independent cases the company closes its 5 books on December 31.

 

1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2014. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2017. The bonds yield 12%. Give entries through December 31, 2015.

 

2. Titania Co. sells $400,000 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2018. The bonds yield 10%. On October 1, 2015, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2016.

 

Instructions

For the two cases prepare all of the relevant journal entries from the time of sale until the date indicated. Use the effective-interest method for discount and premium amortization (construct amortization tables where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing entries were made.)

 

TUTORIAL PREVIEW

Schedule of Bond Discount Amortization
Effective-Interest Method
10% Bonds Sold to Yield 12%
Date	Cash Paid	Interest Expense	Discount Amortized	Carrying Amount of Bonds
Mar 1, 14				472,088
Sep 1, 14	25,000	28,325	3,325	475,413
Mar 1, 15	25,000	28,525	3,525	478,938

 

File name: P14-5 Comprehensive.xls File type: xls PRICE: $10