Chapter 2 Lab/Review Worksheet
1. A selected list of accounts used by Firenze Flooring follows:
Cash Accounts or Wages Payable
Accounts Receivable Factory Labor
Raw Materials Inventory Manufacturing Overhead
Work In Process Inventory Cost of Goods Sold
Finished Goods Inventory Sales Revenue
Firenze Flooring uses a job order system and maintains perpetual inventory records.
Instructions: Place the appropriate account in the columns indicating the appropriate account(s) to
be debited and credited for the transactions listed below.
Transaction Account(s) Debited Account(s) Credited
a) Raw materials were purchased on account.
b) Factory labor was incurred and is due to employees.
c) Direct materials were issued to Work in Process.
d) Paid for raw materials purchased previously on
account.
e) Raw materials were issued to the production facility
to be used indirectly during the production process.
f) Recognized direct labor and supervisor salaries used.
g) Overhead cost was applied to production based on a
predetermined overhead rate of $8 per labor hour.
h) Production that was completed and transferred to
Finished Goods.
i) Goods with a production cost of $80,000 were sold
for $105,000 on account. (Hint: There will be two
accounts debited and two accounts credited).
2. During the first year of operations, Moss Manufacturing accumulated the following
manufacturing costs:
Chapter 2 Lab/Review Worksheet
Raw materials purchased on account $16,500
Factory labor accrued $7,200
Incurred manufacturing overhead on
$4,400
account
a. Prepare separate journal entries for each manufacturing cost.
Raw Materials Purchased on Account:
Account Titles Debit Credit
Factory Labor Accrued:
Account Titles Debit Credit
Incurred Manufacturing Overhead on Account:
Account Titles Debit Credit
b. Moss used $12,400 of direct materials and $3,000 of indirect materials on Job 152.
Prepare the journal entry to record the materials used.
Account Titles Debit Credit
Chapter 2 Lab/Review Worksheet
3. Hunt Company estimates that annual manufacturing overhead costs will be $360,000.
Estimated annual operating activity bases are: direct labor cost $175,000, direct labor hours
40,000 and machine hours 80,000. The actual manufacturing overhead cost for the year was
$372,000 and the actual direct labor cost for the year was $172,000. Actual direct labor hours
totaled 41,500 and machine hours totaled 79,000. Hunt applies overhead based on direct labor
hours.
a. Compute the predetermined overhead rate per direct labor hour.
b. Determine the amount of manufacturing overhead applied.
c. Determine if overhead is over- or under-applied and the amount.
d. Assume that Actual Manufacturing Overhead for the year was $302,000 and Applied
Manufacturing Overhead was $298,000. Based on these numbers, what is the journal
entry to correct the balance in the Manufacturing Overhead account at the end of the
year?
Chapter 2 Lab/Review Worksheet
4. A computer consulting company uses job costing system and has a pre-determined overhead
rate of $10 per direct labor hour. This amount is based on an estimated overhead of $20,000
and 2,000 estimated Direct Labor hours. In addition, Selling, General, and Administrative
(SG&A) costs for the period totaled $120,000. Total units produced during the period were
1,650,000. Job # 521 incurred direct material costs of $25 and two direct labor hours costing of
$55 per hour.
The total cost of Job # 521 is:
