Acc 220 chap 3

Need help with the attached spreadsheet. Thank you kindly

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Integrated Example Ch.3 Variance is material Job Order Costing Variance must be capitalized @ rep

or

ting date for GAAP M WIP FG Operating

7

days a week A. Overhead

Budget for the Year: Y = a + b

X Beginning $

8

,000 $

1

1,000 $1

4

,000 Variable

Overhead per Direct Labor [

DL

] Hrs. $ 2.7

5

b

Est Add

itions $45,000 $92,500 $27,000 June May Estimated DL

hrs

. 4

2,000

X Est

Used/completed/sold (

$43,000

) ($27,000)

($27,000)

Actual overhead spending $ 1,085,000 $ 1,000,200 Variable

$ 115,500 bX

Est

Ending $

10

,000 $7

6

,500 $14,000 Applied

overhead $ 962,000 $ 933,000 Fixed Overhead $ 94,500

a Est

Under

applied $ 123,000 $ 67,200 $ 210,000

$ 210,000

Y=a+bX Portion of month in inventory 30/30 18/31 42,000

POHR $ 5.00 per DL Hr. 100.0% 58.1% $5.00 Dr/(Cr)

Dr/(Cr)
Dr/(Cr) Dr/(Cr)

Income statement Ending inventory/days 48.00 Contra acct. or Inventory Overhead spending

in

CoGS Liability Acct. Materials

WIP FG CoGS CoGS

Selling & Admin Exp Balance in inventory @ June end $ 162,019 May ending Inventory [Beginning fo June] $8,000 $

11,000

$14,000

Period June Ending Inventory before adjustment

$10,000 $76,500 $14,000
Material in production June Activity

Beginning $8,000
1

Purchase Materials A/P ($45,000)

$45,000

Added

$45,000
Ending

($10,000) 2

Issued Materials from inventory

$43,000

materials from inventory used in period Cost including allocation of Fixed Cost Materials for products ($43,000) $40,000 (

$3,000

) less materials to overhead Variable Cost: Direct Cost [Direct Labor & Materials] + Indirect materials

$3,000 $40,000

Materials used in production Variable overhead [within a relevant range] Marginal Cost: the out-of-packet costs to produce [sell] next unit 3

Payroll for Period Total

Manufacturing costs Sales Salaries $2,000

Materials $40,000

Manufacturing Overhead Control Direct labor charges to jobs [

3500

hrs.@$10/hr] Wage payable ($49,000) $35,000

DL

SG&A

DL $35,000

Accounts are resident in CoGS Indirect manufacturing labor $12,000

Applied overhead

$17,500 Spending

Accounts Mfg.OH

$92,500

Salary Expense 66,000 4

Other Manufacturing overhead spending Wage Expense 78,000 Utilities (

$1,700

)

$1,700

Production Direct labor 215,000 Accum. Depreciation (

$2,900

)

$2,900

Fringe benefit expense 74,000 $3,000
Factory Property taxes payable (

$1,000

)

$1,000 $12,000

Commission expense – 0 $ 710,000 Budget/estimated OH Spending $1,700

Advertising expense 750 35500 Budget/estimated Dl Hrs. 5

Apply overhead to jobs using POHR

3500 hrs $17,500

($17,500)

$2,900

Building rent expense 21,000 $ 20.00

POHR
$ 5.00 $1,000

Equipment lease expense 5,800 34,000 Acutal DL Hrs. 6

Incur Selling expense-Advertising $3,500 $750 $20,600 Office supply expense 2,300 $680,000 Applied Overhead Contract labor Expense

34,000
7

Completed Work from WIP

($27,000) $27,000 Beginning $11,000 WIP

Travel/entertainment exp.

2,000
added

$92,500

Professional services 3,200 Ending

($76,500)

WIP

Bank charges/fees

– 0
To FG

$27,000

Cost of Goods manufactured Depreciation expense 1

44,000 Miscellaneous expense 3,950 8

Sold FG to Customer

($27,000) $27,000 Beginning $14,000 Total

650,000 this had been debited to CoGS added $27,000

inventory did NOT change Ending

($14,000) usually beginning ≠ ending

Applied overhead

(680,000) this was credited thru Applied OH acct. to CoGS To CoGS

$27,000

Cost of Goods Sold [CoGS] Net Effect (30,000) decrease CoGS B 1 End of period adjustment for over/

under

applied overhead

WIP FG

$3,100 ←Sum under applied overhead +Q51+P51 $s applied OH in Inventory [less than 1 Mo. In Inv.] GIVEN Memo

$10,000

$1,500 MOH remaing in Inv. %

Underapplied

($17,500) $20,600

17.7%

$3,100
Add 17.7%

$1,771 $266 (

$2,037

) Entry

17.7% Applied Spending under

-17.7% Overhead is applied on labor Hrs Inventory up 65.71%

applied
Dr. Inventory= Under applied [inventory too low, profit too low] 87% 13%

$3,100 WIP FG

35000 17500 (Cr.) Inventory= over applied [Inventory too high, profit too high]

$10,000 $1,500

$11,500

3500 3500
If over applied Cr. Inventory AND dr. CoGS +11500/17500 =

65.71%

of a month

10 5
+66% * $3100

$2,037
B 2 End of period adjustment for over/under applied overhead

WIP FG

$7,264

←Sum under applied overhead Integrated Example
$s applied OH in Inventory [more than 1 Mo. In Inv.]

Memo $8,000

$32,000 çççççMore than one month ($728) $ (2,914) $3,642

Entry
Overhead is applied on labor Hrs Inventory up
Dr. Inventory= Under applied [inventory too low, profit too low]
(Cr.) Inventory= over applied [Inventory too high, profit too high]
If over applied Cr. Inventory AND dr. CoGS $40,000

Applied in inventory $17,500

Applied this Mo $16,000 Applied prior Mo $16,500 Applied 2nd Mo. Prior Over/(under applied) Adjustment

to ending inventory # mo Applied in inventory 1.00

$17,500 Applied this Mo

($3,100) $ (3,100)

17.7% under applied
1.00 $16,000 Applied prior Mo

$600 $ 600 given 0.39 $6,500

Applied 2nd Mo. Prior

($2,900) $ (1,142)

given
2.39 $ 40,000 ($5,400) $ (3,642) $8,000 $32,000 $40,000
20.0% 80.0%

100.0%
$ (728)

$ (2,914) $ (3,642)

Ch 3 HW

WIP FG Total Overhead

44,000

11,000

175,000

Overhead spending 89,000

or

Underapplied
Show calculations WIP FG

39,000 175,000

11,000 69,840

Adjustment

Show calculations

POHR =

Applied overhead =
Overapplied or either over OR under not both
Underapplied

COG Manufactured

Chapter 3
HW—ACC220—HCT
Assume over/under applies to ending inventory
hours= Basis for POHR
Capacity/hrs.	10,500
Budget/Hrs	9,600	basis for POHR
Budgeted overhead spending $s	82,560	8.6
Actual/Hrs	9,300
Ending is before over/under applied	Raw Materials
Beginning Inventory $s	125,000	1	89,000	358,000
Total Ending Inventory $s	131,000		39,000			175,000	345,000
Overhead in inventory		69,840	80,840
Actual Period Spending
Purchased material to Raw Matls.	Note to get addition to WIP for materials
Direct labor spending	18,000	+ Beginning + adds to Materials – ending materials = materials into WIP [ WIP additions for materials]
[A] What is POHR & what is over/under applied using Actual spending, actual production & budget hrs. based POHR
	POHR =	$8.60
	Applied overhead =
	Overapplied		either over OR under not both
[B] Actual Cost of goods manufactured using budget overhead rate as POHR before applying over/under applied overhead
From WIP to FG
		Show calculations
	COG Manufactured	Look up the formulae; see PPT and/or excel
[C]Based on Ending inventory $s, inventory is to be adjusted, show adjustment to inventory for over /under applied overhead using budgeted POHR
adjustment only overhead
Ending total
Ending Overhead	equals exactly one month of inventory combined
Adjusted Ending
determine what portion of the month applied is in inventory at PE
then how much is in WIP how muck in FG
[D] What is Cost of goods manufactured using Capacity overhead rate as POHR before applying over/under applied overhead

Sheet3