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The document contains exercises related to computing predetermined overhead rates, preparing journal entries for manufacturing transactions, and schedules for cost of goods manufactured and sold. It includes specific financial data for Harris Fabrics and Larned Corporation, as well as calculations for underapplied and overapplied overhead for Osborn Manufacturing. Each exercise requires the application of accounting principles to analyze manufacturing costs and their impact on financial statements.

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3 views2 pages

Job Order

The document contains exercises related to computing predetermined overhead rates, preparing journal entries for manufacturing transactions, and schedules for cost of goods manufactured and sold. It includes specific financial data for Harris Fabrics and Larned Corporation, as well as calculations for underapplied and overapplied overhead for Osborn Manufacturing. Each exercise requires the application of accounting principles to analyze manufacturing costs and their impact on financial statements.

Uploaded by

o0474420
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Job order

EXERCISE 3–3 Compute the Predetermined Overhead Rate [ LO3 ]


Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor
hours. At the beginning of the year it estimated that its total manufacturing overhead would be
$134,000 and the total direct labor would be 20,000 hours. Its actual total manufacturing
overhead
for the year was $123,900 and its actual total direct labor was 21,000 hours.
Required:
Compute the company’s predetermined overhead rate for the year.

EXERCISE 3–4 Prepare Journal Entries [ LO4 ]


Larned Corporation recorded the following transactions for the just completed month.
a. $80,000 in raw materials were purchased on account.
b. $71,000 in raw materials were requisitioned for use in production. Of this amount, $62,000
was for direct materials and the remainder was for indirect materials.
c. Total labor wages of $112,000 were incurred. Of this amount, $101,000 was for direct labor
and the remainder was for indirect labor.
d. Additional manufacturing overhead costs of $175,000 were incurred.
Required:
Record the above transactions in journal entries.

EXERCISE 3–6 Schedules of Cost of Goods Manufactured and Cost of Goods Sold [ LO6 ]
Primare Corporation has provided the following data concerning last month’s manufacturing
operations.

Purchases of raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,000


Indirect materials included in manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . $5,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $58,000
Manufacturing overhead applied to work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . $87,000
Underapplied overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000
Inventories Beginning Ending
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . $12,000 $18,000
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . $56,000 $65,000
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 $42,000

Required:
1. Prepare a schedule of cost of goods manufactured for the month.
2. Prepare a schedule of cost of goods sold for the month.

EXERCISE 3–8 Underapplied and Overapplied Overhead [ LO8 ]


Osborn Manufacturing uses a predetermined overhead rate of $18.20 per direct labor-hour. This
predetermined rate was based on 12,000 estimated direct labor-hours and $218,400 of estimated
total manufacturing overhead.
The company incurred actual total manufacturing overhead costs of $215,000 and 11,500 total
direct labor-hours during the period.
Required:
1. Determine the amount of underapplied or overapplied manufacturing overhead for the
period.
2. Assuming that the entire amount of the underapplied or overapplied overhead is closed out to
Cost of Goods Sold, what would be the effect of the underapplied or overapplied overhead on
the company’s gross margin for the period?

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