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ACC 369/BrewerCh 4 SolutionsCopyright 2009 by Pearson Eduation! "n#

4-1 Cost pool$$a grouping o% indi&idual ost ite's#Cost tracing$$the assigning o% diret osts to the hosen ost ob(et#Cost allocation$$the assigning o% indiret osts to the hosen ost ob(et#Cost-allocation basea %ator that lin)s in a syste'ati way an indiret ost or group o%

indiret osts to a ost ob(et#

4-2 "n ajob-costing system,osts are assigned to a distint unit! bath! or lot o% a produt orser&ie# "n aprocess-costing system, the ost o% a produt or ser&ie is obtained by using broada&erages to assign osts to 'asses o% idential or si'ilar units#

4-6 *hree 'a(or soure dou'ents used in (ob+osting syste's are ,-. (ob ost reord or (obost sheet! a dou'ent that reords and au'ulates all osts assigned to a spei%i (ob! starting

when wor) begins ,2. 'aterials reuisition reord! a dou'ent that ontains in%or'ation aboutthe ost o% diret 'aterials used on a spei%i (ob and in a spei%i depart'ent and ,3. labor+ti'ereord! a dou'ent that ontains in%or'ation about the labor ti'e used on a spei%i (ob and in aspei%i depart'ent#

4-7 *he 'ain onern with the soure dou'ents o% (ob ost reords is the auray o% thereords# Proble's ourring in this area inlude inorret reording o% uantity or dollara'ounts! 'aterials reorded on one (ob being 1borrowed and used on other (obs! and erroneous(ob nu'bers being assigned to 'aterials or labor inputs#

4-9 Atual osting and nor'al osting di%%er in their use o% atual or budgeted indiret ostrates

Actual

Costing

Normal

Costing

iret+ost rates"ndiret+ost rates

Atual ratesAtual rates

Atual ratesBudgeted rates

Eah osting 'ethod uses the atual uantity o% the diret+ost input and the atual uantity o%the ost+alloation base#

4#-6 ,-0 'in. Job order costing, process costing.

a# 5ob osting l# 5ob ostingb# Proess osting '# Proess osting# 5ob osting n# 5ob ostingd# Proess osting o# 5ob ostinge# 5ob osting p# 5ob osting%# Proess osting # 5ob osting

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g# 5ob osting r# Proess ostingh# 5ob osting ,but so'e proess osting. s# 5ob ostingi# Proess osting t# Proess osting(# Proess osting u# 5ob osting)# 5ob osting

4-17 ,20 'in#. Actual costing, normal costing, accounting for manufacturing oer!ead.

-#Budgeted 'anu%aturing

o&erhead rate

ostslaboring'anu%aturdiretBudgeted

ostso&erhead

ing'anu%aturBudgeted

72!800!000

7-!00!000 -#:0 or -:;

rateo&erheading'anu%aturtualA

ostslaboring'anu%aturdiretAtual

ostso&erheading'anu%aturAtual

72!8!000

7-!40!000 -#9 or -90;

2# Costs o% 5ob 626 under atual and nor'al osting %ollow

Actual Normal

Costing Costingiret 'aterials 7 40!000 7 40!000iret 'anu%aturing labor osts 30!000 30!000

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3#*otal 'anu%aturing o&erheadalloated under nor'al osting

Atual 'anu%aturinglabor osts

Budgeted

o&erhead rate

7-!40!000 -#:0

72!6-0!000

=nderalloated 'anu%aturingo&erhead

Atual 'anu%aturing

o&erhead osts$

ene! there is no under+ or o&eralloateado&erhead#

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4-19 ,-0 'in#. "udgeted manufacturing oer!ead rate, allocated manufacturingoer!ead.

-# Budgeted 'anu%aturing o&erhead rate Budgeted 'anu%aturing o&erhead

Budgeted 'ahine hours

74!000!000

200!000 'ahine+hours

720 per 'ahine+hour

2#

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4-2# ,20+30 'in#. Job costing, accounting for manufacturing oer!ead, budgeted rates.

-# An o&er&iew o% the produt osting syste' is

COST OBJECT:PRODUCT

COSTALLOCATION

BASE

DIRECTCOST

}

}

Machining DepartmentManufacturing Overhead

Machine-Hours

DirectMaterials

INDIRECTCOSTPOOL}

DirectManufacturing

Labor

Indirect Costs

Direct Costs

}

Assembly DepartmentManufacturing Overhead

Direct Manuf.Labor Cost

Budgeted 'anu%aturing o&erhead di&ided by alloation base

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4-24 ,34 'in#. Job costing, &ournal entries.

So'e instrutors 'ay also want to assign Eerise 4+2# "t de'onstrates the relationships o% thegeneral ledger to the underlying subsidiary ledgers and soure dou'ents#

-# An o&er&iew o% the produt osting syste' is

CS* B5EC*3PD"* 5B

CS*AFFCA*"

BASE

4"DEC*CS*

}

}

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2# G 3#*his answer assu'es CHS gi&en o% 74!020 does not inlude the writeo%% o% o&eralloated'anu%aturing o&erhead#

2# ,-.

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3#

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4-'1 ,2030 'in. Job costing, accounting for manufacturing oer!ead, budgeted rates.

-# An o&er&iew o% the (ob+osting syste' is

2# Budgeted 'anu%aturing o&erhead di&ided by alloation base

a#

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3#

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4-'4 ,202 'in#. )roration of oer!ead.

-# Budgeted 'anu%aturing o&erhead rate is 74!:00!000 J :0!000 hours 760 per 'ahine+hour#

2#

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3# Alternati&e ,. is theoretially pre%erred o&er ,a. and ,b.# Alternati&e ,. yields thesa'e ending balanes in wor) in proess! %inished goods! and ost o% goods sold thatwould ha&e been reported had atual indiret ost rates been used#

Chapter 4 also disusses an ad(usted alloation rate approah that results in thesa'e ending balanes as does alternati&e ,.# *his approah operates &ia a restate'ent o%

the indiret osts alloated to all the indi&idual (obs wor)ed on during the year using theatual indiret ost rate#

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4#36 ,40 'in#. )roration of oer!ead it! to indirect cost pools.

-#a# C G A depart'ent

&erhead alloated 7404!000

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*otal 72!000!000 -#000 7-0!

000 7-!990

2# &eralloated o&erhead prorated based on o&erhead in ending balanes# ,oteo&erhead 'ust be alloated separately %ro' eah depart'ent# *his an be done using the

nu'ber o% 'ahine hours/diret labor hours as a surrogate %or o&erhead in endingbalanes#.

Ior C G A depart'ent

Account

Allocated /er!ead in

5ec. '1, 2## "alance

*1+

Allocated /er!ead in


as a )ercent of otal

*2+ 0 *1+ 8 16#,###

)roration of ',#

nderallocated

/er!ead

*'+ 0 *2+'###@"P 200740 7 :!000 0#0 0#073!000 7Iinished Hoods 600740 24!000 0#- 0#-73!000 Cost o% Hoods Sold 3!200740 -2:!000 0#:0 0#:073!000 *otal 7-60!000 -#00 7

Ior %inishing depart'ent

Account

Allocated /er!ead in 5ec.

'1, 2## "alance

*4+

Allocated /er!ead

in 5ec. '1, 2##

"alance

as a )ercent of otal

*3+ 0 *4+ 8 1##,###

)roration of 1',###

nderallocated /er!ea

*6+ 0 *3+1',###

@"P -0070 7 !000 0#0 0#07-3!000 7 6Iinished Hoods 40070 20!000 0#20 0#207-3!000 2!6Cost o% Hoods Sold -!0070 8!000 0#8 0#87-3!000 9!8*otal 7-00!000 -#00 7-3!0

Account


*"efore )roration+

*7+

nderallocated:

/erallocated

/er!ead

*+ 0 *'+ *6+

5ec. '1, 2##9 "alan

*After )roration+

*9+ 0 *7+ *+

@"P 7 -0!000 7-0 760 7 ,00. 7 -49!00

Iinished Hoods 20!000 740 $ 72!600 *2!-0. 248!:0Cost o% Hoods Sold -!600!000 72!400$ 79!80 ,8!30. -!92!60*otal 72!000!000 7,-0!000. 7-!990!000

3# *he %irst 'ethod is si'ple and Cost o% Hoods Sold aounts %or :0; o% the threeaount a'ounts# *he a'ount o% o&eralloated and underalloated o&erhead is alsoi''aterial# Alloation to the other two aounts is 'ini'al# *here%ore! write+o%% to osto% goods sold is the 'ost ost e%%eti&e alternati&e#

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S-369-H-Ch4