• Ch. 2 – Problem P2-4A
• Ch. 3 – Problem P3-3A
• Managerial Analysis BYP 2-2
P2-4A Acquatic Manufacturing uses a job order cost system in each of its three manufacturing
departments. Manufacturing overhead is applied to jobs on the basis of direct
labor cost in Department A, direct labor hours in Department B, and machine hours in
Department C.
In establishing the predetermined overhead rates for 2005 the following estimates
were made for the year.
Instructions
(a) Compute the predetermined overhead rate for each department.
(b) Compute the total manufacturing costs assigned to jobs in January in each department.
(c) Compute the under- or overapplied overhead for each department at January 31.
P3-3A Stein Corporation manufactures in separate processes refrigerators and freezers
for homes. In each process, materials are entered at the beginning and conversion costs
are incurred uniformly. Production and cost data for the first process in making two products
in two different manufacturing plants are as follows.
Instructions
(a) For each plant:
(1) Compute the physical unit flow.
(2) Compute equivalent units of production for materials and for conversion costs.
(3) Determine the unit costs of production.
(4) Show the assignment of costs to units transferred out and in process.
(b) Prepare the production cost report for Plant A for June 2005.
BYP 2-2 In the course of routine checking of all journal entries prior to preparing yearend
reports, Sally Yount discovered several strange entries. She recalled that the president’s
son Ken had come in to help out during an especially busy time and that he had
recorded some journal entries. She was relieved that there were only a few of his entries,
and even more relieved that he had included rather lengthy explanations. The entries Ken
made were:
Instructions
(a) How should Ken have recorded each of the four events?
(b) If the entry was not corrected, which financial statements (income statement or balance
sheet) would be affected? What balances would be overstated or understated?
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