## Week 3 Assignment Chapter Question

Week 3 Assignment Chapter Question: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.
b. Compute the cost of jobs completed during January, and present the proper journal entry to
reflect job completion.
Chapter 4 Exercise 7
The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following
divisional information is presented for your review:

Actual machine hours
Estimated machine hours

Division
A
22,500
20,000
\$4.50
\$110,00
0
?
?

Divisio
nB
?
?
\$5.00
?
\$90,000
\$86,000

Over- (under-) applied

?

\$6,500

FIND THE UNKNOWNS FOR EACH OF THE DIVISIONS.

Chapter 4 Problem 2
2. Computations using a job order system
General Corporation employs a job order cost system. On May 1 the following balances were extracted
from the general ledger;
Work in process
Finished goods
Cost of goods sold

\$ 35,200
86,900
128,700

Work in Process consisted of two jobs, no. 101 (\$20,400) and no. 103 (\$14,800). During May, direct
materials requisitioned from the storeroom amounted to \$96,500, and direct labor incurred totaled
\$114,500. These figures are subdivided as follows:
Direct
Materi
als
Job No.
101
115
116
Other

Amount
\$5,000
19,500
36,200
35,800
\$96,500

Direct Labor
Job No.
101
103
115
116
Other

Amount
\$7,800
20,800
42,000
18,000
25,900
\$114,500

Job no. 115 was the only job in process at the end of the month. Job no. 101 and three &quot;other&quot; jobs were
sold during May at a profit of 20% of cost. The &quot;other&quot; jobs contained material and labor charges of
\$21,000 and \$17,400, respectively.

General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to
job orders. The firm’s fiscal year ends on May 31.
Instructions:
a. Compute the total overhead applied to production during May.
b. Compute the cost of the ending work in process inventory.
c. Compute the cost of jobs completed during May.
d. Compute the cost of goods sold for the year ended May 31.

Chapter 5 Exercise 1
1. High-low method
The following cost data pertain to 19X6 operations of Heritage Products:
Shipping costs
Orders shipped

Quarter 1
Quarter 2
Quarter 3
Quarter 4
\$58,200
\$58,620
\$60,125
\$59,400
120
140
175
150

The company uses the high-low method to analyze costs.
a. Determine the variable cost per order shipped.
b. Determine the fixed shipping costs per quarter.
c. If present cost behavior patterns continue, determine total shipping costs for 19X7 if activity
amounts to 570 orders.
Chapter 5 Exercise 2
The treasurer anticipates the following costs for the event, which will be held at the Regency Hotel:
Room rental

\$300

Dinner cost (per person)

25

Chartered buses

500

Favors and souvenirs (per person)

5

Band

900

Each person would pay \$40 to attend; 200 attendees are expected.

a. Will the event be profitable for the sorority? Show computations.
b. How many people must attend for the sorority to break even?
c. Suppose the sorority encouraged its members to drive to the hotel and did not charter the buses.
Further, a planned menu change will reduce the cost per meal by \$2. If each member will still be
charged \$40, compute the contribution margin per person.
Chapter 5 Exercise 3
3. Break-even and other CVP relationships
Cedars Hospital has average revenue of \$180 per patient day. Variable costs are \$45 per patient day;
fixed costs total \$4,320,000 per year.
a. How many patient days does the hospital need to break even?
b. What level of revenue is needed to earn a target income of \$540,000?
c. If variable costs drop to \$36 per patient day, what increase in fixed costs can be tolerated without
changing the break-even point as determined in part (a)?
Chapter 5 Problem 6
6. Direct and absorption costing
The information that follows pertains to Consumer Products for the year ended December 31, 19X6.
Inventory, 1/1/X6
Units manufactured
Units sold
Inventory, 12/31/X6
Manufacturing costs:
Direct materials
Direct labor
Variable
Fixed

24,000 units
80,000
82,000
? units
\$3 per unit
\$5 per unit
\$9 per unit
\$280,000
\$2 per unit
\$136,000

The unit selling price is \$26. Assume that costs have been stable in recent years.
Instructions:
a. Compute the number of units in the ending inventory.
b. Calculate the cost of a unit assuming use of:
1. Direct costing.
2. Absorption costing.

c. Prepare an income statement for the year ended December 31, 19X6, by using direct costing.
d. Prepare an income statement for the year ended December 31, 19X6, by using absorption
costing.