1. Record the following journal entries for TEB Company in good form and without abbreviations.
Do not provide explanations beneath your journal entries.
- Raw materials used in production total $35,000: $30,000 direct and $5,000 indirect
- Salaries and wages costs incurred/accrued, but not yet paid, $115,000:
- Direct manufacturing labor cost, $60,000
- Indirect manufacturing labor cost, $40,000
- Sales salaries, $15,000
3. Depreciation on factory equipment, $38,000
4. Manufacturing overhead is applied at a predetermined rate of 200% of direct labor cost
5. Cost of goods manufactured for the month, $160,000
6. Goods costing $150,000 to produce were sold on credit for $225,000. Only record the goods leaving the company. Assume someone else will record the credit sale.
2. Cost of Goods Sold section of income statement
Prepare for Buttross Company, in good form and without abbreviations, the Cost of Goods Sold section of the income statement (Only the cost of goods sold section. )
In order to present cost of goods sold, you will need to compute the cost of goods manufactured. Do NOT present a Statement of Cost of Goods Manufactured in your solution and do NOT show the computation of cost of goods manufactured .
The following costs relate to one month's operations:
- Indirect labor400
- Rent on factory building350
- Maintenance of factory equipment100
- Direct material used1,200
- Utilities in factory200
- Direct labor1,500
- Selling expense900
- Administrative expense700
- Work in process, beginning800
- Work in process, end600
- Finished goods, beginning500
- Finished goods, end250
3. Activity-Based Costing
Prepare for World Company, in good form and without abbreviations, a computation of the estimated product cost per unit for the current period using the activity-based costing approach.
World Company manufactures two products, Product X and Product Z. The company estimates it will incur $100,000 of manufacturing overhead for the current period. Overhead currently is assigned to the products using direct labor hours. Data concerning the current period's operations under the traditional system are:
Product X Product Z
- Estimated volume in units4001,500
- Direct labor hours per unit0.701.20
- Direct materials cost per unit$10.50$16.75
- Direct labor cost per unit$11.25$20.00
- Manufacturing overhead cost per unit*$33.66$57.70
Using direct labor hours as the allocation base: 400 units x 0.7 direct labor hours per unit + 1,500 units x 1.2 direct labor hours per unit = 2,080 estimated direct labor hours; $100,000 estimated manufacturing overhead/2,080 direct labor hours (DLH) = $48.08 per DLH; $48.08 x 0.70 = $33.66 and $48.08 x 1.20 = $57.70.
In order to compute estimated cost under activity-based costing, the company has identified two activity cost pools, broken down the estimated overhead, and estimated activity levels as follows:
Estimated Activity
Activity Cost Pool Overhead Product X Product Z Total
- Setup machines$ 20,000200300500
- Prepare purchase orders80,0009005001,400
- Total$100,000
4. Cash Budget
Prepare for StartUp Company, in good form and without abbreviations, a cash budget for the month of January, 2015.
StartUp Company has asked you to prepare a cash budget for the month of January 2015, using the following information:
- Projected cash balance at December 31, 2014, $2,000
- Minimum cash balance desired January 31, 2015, $4,000.
- Minimum cash balance desired, December 31, 2015, $8,000
Projected transactions in January are:
- Cash collections from sales$25,000
- Cash from tax refund14,000
- Purchases of merchandise inventory10,000
- Selling and administrative expenses (excluding depreciation)25,000
- Depreciation of building and equipment15,000
- Purchases of store equipment(one-half to be paid in February)40,000
- Declaration of a dividend (100% to be paid in February)12,000
- Amortization of patents11,000
Where a projected transaction involves a cash outlay, unless otherwise noted the cash will be paid in January.
The company has a line of credit at the bank, which allows borrowing up to $100,000. Since March 2014, the company has had loans of $30,000 outstanding at 12% interest. Interest is payable quarterly on March 31, June 30, September 30, and December 31.