Mi Casa is a housekeeping company in Brownsville, Texas. The corporation is owned 100 percent by Jean Kline. Jean plans to develop the company into a multimillion-dollar company as the demand for housekeeping services in Brownsville is increasing at a rapid pace as the community grows.
Currently, Jean has three housekeepers who each work a 40-hour week. Over the past four weeks, the actual hours worked were as follows:
Week 1 Week 2 Week 3 Week 4 Total
Housekeepers 136 140 145 145 566
Jean is concerned with the hours worked. Analyze the activity for the four weeks by preparing a table showing the estimated hours, actual hours, and the hours under (or over) estimate. Based on the information in your table, does Jean have reason for concern? If so, what could some of the possible reasons be for the hours spent?
2. – 8 points
The Assembly Department of KEIA employs three direct laborers and two supervisory personnel. For the past several months, the employees have been assembling desks from pieces prepared in the Cutting Department. Three desks are expected to be produced for every labor hour incurred in the department. The hours worked in April, May, and June appear below.
April May June
Employee Direct Labor Supervisory Direct
Labor Supervisory Direct
Labor Supervisory
M. Jackson 178 180 185
J. Taylor 172 182 178
C. Dion 182 178 190
B. Dylan 188 176 184
J. Baez 167 188 195
Actual production of desks for April was 2,501; May, 2,532; and June, 2,601.
a. Calculate the number of desks expected to be produced each month.
b. By what percentage did production fall short of expectations each month?
c. Comment on your calculations, and recommend what actions should be taken by the plant manager.
3. – 8 points
O’Connell Corporation had the following transactions for its job order costing operation.
Apr. 4 Purchased materials on account, $17,000.
7 Direct materials requisitioned to production, Job No. 106, $15,800.
12 Direct labor, Job No. 106, $15,200.
16 Indirect materials (factory overhead) requisitioned to production, $3,300.
22 Indirect labor (factory overhead), $2,400.
28 Other indirect costs (factory overhead, credit Accounts Payable), $2,700.
Required:
Prepare general journal entries to record these transactions.
GENERAL JOURNAL Page 1
Date
Description Post
Ref.
Debit
Credit
4. – 2 points
McMann Company makes lawn care equipment. It applies overhead at the rate of 125% of direct labor costs. During the year, direct labor costs were $140,000. The actual overhead was $177,000. Make the appropriate general journal entry dated December 31, 20__, to adjust the factory overhead account balance (under- or overapplied) for the year.
GENERAL JOURNAL Page 1
Date
Description Post
Ref.
Debit
Credit
5. – 8 points
Step-in-Time Manufacturing had the following transactions for its job order costing operation:
Mar. 4 Purchased materials on account, $31,000.
8 Direct materials requisitioned to production, Job No. 101, $24,000.
15 Indirect materials (factory overhead) requisitioned to production, $16,000.
31 Direct labor, Job No. 101, $20,500.
31 Indirect labor (factory overhead), $9,750.
31 Other indirect costs (factory overhead, credit Accounts Payable), $12,200.
Required:
Prepare general journal entries to record these transactions.
GENERAL JOURNAL Page 1
Date
Description Post
Ref.
Debit
Credit
6. – 5 points
The following information is supplied for Chang Manufacturing Company.
Work in process, January 1, 20__ $23,725
Materials inventory, January 1, 20__ 11,800
Materials purchases 12,700
Materials inventory, December 31, 20__ 10,900
Direct labor 15,400
Factory overhead 6,700
Work in process, December 31, 20__ 19,500
Required:
Prepare a schedule of cost of goods manufactured for the year ended December 31, 20__.
7. – 6 points
Bear Country produces hand-carved wooden bears and uses a job order costing system. The following are data on the three jobs worked on in the company’s first month of operations:
Smokey Rocky Curious
Number of bears 180 100 80
Direct labor hours worked 400 200 140
Direct materials cost $4,500 $2,700 $2,000
Direct labor cost $6,000 $3,000 $2,100
8. – 5 points
Overhead cost is applied to job orders on the basis of direct labor hours at a predetermined rate of $10 per hour. The Smokey and Rocky bears were completed during the month, and the Curious bears remained in work in process at the end of the month.
a. Compute the cost transferred to finished goods during the month.
b. Compute the unit cost for a Rocky bear.
9. – 10 points
Carlson Manufacturing is a producer of plastic bottles for bottled water companies. In July of this year, the plant manager switched to a new supplier of raw materials. The materials have a lower cost, and because of their chemical composition, more bottles can be made per hour. The downside of this faster production is that more bad, unusable bottles result. Below are the production data for the two months before and after the switch of suppliers.
May June July August
Good Bad Good Bad Good Bad Good Bad
Machine 1 21,014 1,116 20,560 1,182 22,584 1,564 23,651 1,622
Machine 2 19,876 1,220 19,614 1,202 22,108 1,605 23,615 1,638
Machine 3 19,912 1,204 20,811 951 22,916 1,477 23,918 1,714
a. Compute bad units as a percentage of total production for each month. Round answers to two decimal places.
b. What does the plant manager need to consider in determining whether or not to continue buying raw material from the new supplier?
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