acct221 week 4 homework latest 2015

Fullerton Aggregate processes raw shale into lightweight aggregate material. This process requires heat treating shale and injecting it with fly ash as it passes through rotating kilns. The shale both expands and hardens in the process, and is ideally suited to road construction. Fullerton uses the weighted-average process costing method to account for production. The following information is available for a recent period:

Beginning work in process on September 1 consisted of 75,000 tons that were 80% complete with respect to raw materials and 50% complete with respect to conversion costs.

Ending work in process on September 30 consisted of 60,000 tons that were 70% complete with respect to raw materials and 40% complete with respect to conversion costs.

860,000 tons of material were put into production, and 875,000 tons exited production. There is no spoilage or loss of tonnage in the production process.

Beginning work in process carried a total cost of $265,000, divided 40/20/40 with respect to direct material/direct labor/factory overhead. Additional costs incurred during the month were $3,000,000, divided 50% to direct material and the remainder on a 1:2 ratio between direct labor and factory overhead.

(a) Prepare a cost of production report for September.

(b) Prepare journal entries to reflect the introduction of additional costs during September, as well as the transfer of completed units to finished goods.

Fullerton Aggregate processes raw shale into lightweight aggregate material. This process requires heat treating shale and injecting it with fly ash as it passes through rotating kilns. The shale both expands and hardens in the process, and is ideally suited to road construction. Fullerton uses the weighted-average process costing method to account for production. The following information is available for a recent period:

Beginning work in process on September 1 consisted of 75,000 tons that were 80% complete with respect to raw materials and 50% complete with respect to conversion costs.

Ending work in process on September 30 consisted of 60,000 tons that were 70% complete with respect to raw materials and 40% complete with respect to conversion costs.

860,000 tons of material were put into production, and 875,000 tons exited production. There is no spoilage or loss of tonnage in the production process.

Beginning work in process carried a total cost of $265,000, divided 40/20/40 with respect to direct material/direct labor/factory overhead. Additional costs incurred during the month were $3,000,000, divided 50% to direct material and the remainder on a 1:2 ratio between direct labor and factory overhead.

(a) Prepare a cost of production report for September.

(b) Prepare journal entries to reflect the introduction of additional costs during September, as well as the transfer of completed units to finished goods.

Ekpro Products manufactures containment chambers for environmentally friendly incinerators. Each chamber is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is the job cost sheet for an incinerator manufactured for Benzate Corporation:

Ekpro Job Cost Sheet

Job: Benzate

Direct Labor Direct Material Applied Overhead Total

Hours Rate Total Qty Cost Per Unit Total Qty Rate Total

May 8, 20X7

Rod Burner 9 $25 $225 $225

Sandy Sharp 1 $12 $12 $12

Steel 10 $80 $800 $800

May 9, 20X7

Sandy Sharp 2 $12 $24 $24

Applied Overhead ? ? $360 $360

12 $261 $800 $360 $1,421

(a) What types of costs do you imagine would be included in factory overhead? If overhead is applied based on direct labor hours, what is the application rate?

(b) Ekpro is considering installation of a robotic machine that will do all welding operations. How might this decision impact the total overhead and the application method?

(c) How does the applied overhead relate to the actual overhead? When they are not the same, what happens to the difference? Why is actual overhead not assigned to each job?

"Zeus Corporation produces cultured diamonds via a secretive process that grows the diamonds in a vacuum chamber filled with a carbon gas cloud. The diamonds are produced in a single continuous process, and Zeus uses the weighted-average process costing method of accounting for production.

The production process requires constant utilization of facilities and equipment, as well as direct labor by skilled technicians. As a result, direct labor and factory overhead are both deemed to be introduced uniformly throughout production."

At the beginning of June, 20X9, 4,000 diamonds were in process. During June, an additional 8,000 diamonds were started, and 7,000 diamonds were completed and transferred to finished goods.

As of the beginning of the month, work in process was 80% complete with respect to materials and 60% complete with respect to conversion costs.

As of the end of the month, work in process was 70% complete with respect to materials and 40% complete with respect to conversion costs.

Prepare a "unit reconciliation" schedule that includes calculations showing the equivalent units of materials, direct labor, and factory overhead for June.

Ashley Corporation provided the following list of cost data related to its manufacturing operations for the month of September 20X4.

Beginning raw materials inventory $9,66,400

Raw materials purchased (net) 23,45,500

Ending raw materials inventory 8,18,200

Direct labor costs 3,22,300

Indirect materials 1,25,500

Indirect labor 88,900

Factory utilities and maintenance 4,56,000

Factory depreciation 56,600

Other factory related overhead 24,400

Beginning work in process 7,77,000

Ending work in process 7,17,000

(a) Arrange the cost data into a statement of cost of goods manufactured.

(b) If Ashley's cost of goods sold for the month was $4,000,000, how much was the increase or decrease in finished goods inventory for the month of September?

"Hawthorn Corporation manufactures custom all-terrain vehicles (ATVs) and uses a job costing system to assign and track costs. March's beginning inventory consisted of the following components:

"

Raw materials $65,000

Work in process 27,000

Finished goods 80,000

"The above beginning work in process consisted only of Job #02.778. The finished goods inventory consisted of Job #01.987 ($42,500) and Job #02.665 ($37,500).

"

"The following descriptions summarize the various transactions that occurred during March:

"

Purchased $112,000 of raw materials.

Used $117,000 of raw materials in the production process. Of this amount, $95,000 consisted of parts and other materials "directly" incorporated into ATVs. The remainder was "indirect" material for shop supplies and small dollar items that are not otherwise traceable to specific ATVs.

Total wages and salaries were $225,000. This total was 60% attributable to direct labor, 10% to indirect labor, 5% to sales commissions, and 25% to general and administrative activities.

Depreciation for the period totaled $28,000. Of this amount, 75% related to factory and factory related equipment, and is contemplated in the factory overhead rates. The other 25% is related to general and administrative activities.

Other general and administrative costs, excluding wages and depreciation, totaled $15,000.

Other factory overhead costs, excluding indirect materials, wages, and depreciation, totaled $35,500.

Hawthorn applies factory overhead at 75% of direct labor costs.

"The ending work in process consisted of two jobs: Job #03.004 ($25,500) and Job #03.772 ($21,500). All completed units had been delivered to customers, and there was no ending finished goods inventory. Sales for the month amounted to $625,000. All sales are for cash at time of shipment.

"

(a) Prepare T-accounts showing how the above costs flow through the accounting system. For simplicity, you may assume that all expenditures and receipts settle in cash, and you will only need the following T-accounts:

Raw Materials Selling Expenses

Work in Process General & Administrative Expenses

Finished Goods Sales

Cost of Goods Sold Cash

Factory Overhead Accumulated Depreciation

(b) Was overhead underapplied or overapplied? What is the disposition of the difference between actual and applied factory overhead?

(c) Prepare an income statement for March. Income taxes of $50,000 were incurred during March.

(d) Prepare summary journal entries to record March's transactions.

Perfect Pad manufacturers floor mats for trailers that are used to transport horses. The mats provide for a firm footing surface that quickly sheds water. Mats are made to customer specifications via orders submitted over an internet site. The mats are completed and shipped in about one day. As a result, Perfect Pad does not maintain any work in process or finished goods inventory. The following costs were incurred in producing and selling mats during August:

Synthetic rubber used in the mat $1,34,300

Lubricant used in the molding machine 14,000

Factory rent 9,600

Electricity to run the molding machine 2,600

Labor cost of machine operators 34,100

Internet sales site 1,500

Administrative salaries 12,500

Depreciation of molding machine 7,400

Salary of factory safety inspector 3,500

Office rent 13,500

Evaluate these costs, and determine the amount of direct material, direct labor, factory overhead, and selling/general/administrative costs. Next, identify how much is considered to be a "prime cost" and how much is considered to be a "conversion cost."