ACC 206: Management Accounting Problems � Cost Flows, Overhead Application, and Cost-Volume-Profit Analysis
A case study exploring management accounting issues such as cost flows, overhead, and CVP analysis.
Charlotte Kelly
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ACC 206: Management Accounting Problems – Cost Flows, Overhead Application, and Cost-
Volume-Profit Analysis
Chapter 4 and 5 Problems
Please complete the following 7 exercises below in either Excel or a word document (but must be single
document). You must show your work where appropriate (leaving the calculations within Excel cells is
acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 4 Exercise 3
3. Cost flows and overhead application
Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of
180% of direct labor cost. Data pertaining to recent operations follow.
• Job no. 636 was the only job in process on January 1 of the current year. The Work in Process account
contained a $24,600 balance on this date.
• Jobs no. 637, 638, and 639 were started during January.
• Total direct material requisitions and direct labor incurred during January amounted to $89,200 and
$114,500, respectively.
• The only job that remained in process on January 31 was job no. 638, with costs of $15,000 for direct
materials and $20,000 for direct labor.
a. Compute the total cost of the work in process inventory on January 31.
total cost of WIP = 15000+20000+1.8*20000= 71000
b. Compute the cost of jobs completed during January, and present the proper journal entry to reflect job
completion.
total = 89200 + 2.8*114500 + 24600= 434,400
Completed = 434400 - 71000 = 363,400
Job Completion = $363,400
Chapter 4 Exercise 7
7. Overhead application: Working backward
The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following
divisional information is presented for your review:
Division
A Division B
Actual machine hours 22,500 17,200 a=g/d
Volume-Profit Analysis
Chapter 4 and 5 Problems
Please complete the following 7 exercises below in either Excel or a word document (but must be single
document). You must show your work where appropriate (leaving the calculations within Excel cells is
acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 4 Exercise 3
3. Cost flows and overhead application
Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of
180% of direct labor cost. Data pertaining to recent operations follow.
• Job no. 636 was the only job in process on January 1 of the current year. The Work in Process account
contained a $24,600 balance on this date.
• Jobs no. 637, 638, and 639 were started during January.
• Total direct material requisitions and direct labor incurred during January amounted to $89,200 and
$114,500, respectively.
• The only job that remained in process on January 31 was job no. 638, with costs of $15,000 for direct
materials and $20,000 for direct labor.
a. Compute the total cost of the work in process inventory on January 31.
total cost of WIP = 15000+20000+1.8*20000= 71000
b. Compute the cost of jobs completed during January, and present the proper journal entry to reflect job
completion.
total = 89200 + 2.8*114500 + 24600= 434,400
Completed = 434400 - 71000 = 363,400
Job Completion = $363,400
Chapter 4 Exercise 7
7. Overhead application: Working backward
The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following
divisional information is presented for your review:
Division
A Division B
Actual machine hours 22,500 17,200 a=g/d
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Document Details
University
Ashford University
Subject
Accounting