ACCT 215 Problems Solutions, Fall 2011

Chapter 3 Job-Order Costing Chapter 3 Job-Order Costing Exercise 3-10 (10 minutes) Direct material.............................. $12,000 Direct labor................................... 8,000 Manufacturing overhead applied: $8,000 × 120%............................ 9,600 Total manufacturing cost............ $29,600 Unit product cost: $29,600 ÷ 200 units................... $148 Exercise 3-11 (30 minutes) 1. a. Raw Materials Inventory.......................... 210,000 Accounts Payable................................... 210,000 b. Work in Process......................................... 152,000 Manufacturing Overhead......................... 38,000 Raw Materials Inventory........................ 190,000 c. Work in Process......................................... 49,000 Manufacturing Overhead......................... 21,000 Salaries and Wages Payable................. 70,000 d. Manufacturing Overhead......................... 105,000 Accumulated Depreciation.................... 105,000 e. Manufacturing Overhead......................... 130,000 Accounts Payable................................... 130,000 3-1 Chapter 3 Job-Order Costing f. Work in Process......................................... 300,000 Manufacturing Overhead...................... 300,000 75,000 machine-hours  $4 per machine-hour = $300,000. g. Finished Goods.......................................... 510,000 Work in Process...................................... 510,000 h. Cost of Goods Sold.................................... 450,000 Finished Goods....................................... 450,000 Accounts Receivable................................. 675,000 Sales......................................................... 675,000 $450,000 × 1.5 = $675,000. 2. Manufacturing Overhead Work in Process (b) 38,000 (f) 300,000 Bal. 35,000 (g) 510,000 (c) 21,000 (b) 152,000 (d) 105,000 (c) 49,000 (e) 130,000 (f) 300,000 6,000 Bal. 26,000 (Overapplied overhead) 3-2 Chapter 3 Job-Order Costing Exercise 3-12 (20 minutes) 1. The estimated total manufacturing overhead cost is computed as follows: Y = $750,000 + $4.00 per MH × 150,000 MHs Estimated fixed manufacturing overhead.............. $  750,000 Estimated variable manufacturing overhead $4.00 per MH × 150,000 MHs................................ 600,000 Estimated total manufacturing overhead cost...... $1,350,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead.... $1,350,00 0 ÷ Estimated total machine-hours (MHs)....... 150,000 MHs = Predetermined overhead rate.................... $9.00 per MH 2. Total manufacturing cost assigned to Job 500: Direct materials.................................. $350 Direct labor......................................... 230 Manufacturing overhead applied $9.00 per MH × 30 MHs.................. 270 Total manufacturing cost.................. $850 3. Computing underapplied/overapplied overhead: Actual manufacturing overhead (a)..... $1,325,000 Actual machine-hours............................ 147,000 × Predetermined overhead rate........... $9.00 = Manufacturing overhead applied (b)........................................................... $1,323,000 Underapplied overhead (a) – (b)........... $             2,000 Manufacturing overhead underapplied........................................ $2,000 The closing entry would increase cost of goods sold by $2,000 and decrease net operating income by $2,000. 3-3 Chapter 3 Job-Order Costing Exercise 3-14 (30 minutes) Note to the instructor: This exercise is a good vehicle for introducing the concept of predetermined overhead rates. This exercise can also be used as a launching pad for a discussion of the appendix to the chapter. 1. Units Produced Manufacturin g Overhead High activity level (First quarter). . 80,000 $228,000 Low activity level (Third quarter).. 20,000 192,000 Change............................................. 60,000 $36,000 Variable cost = Change in cost ÷ Change in activity = $36,000 ÷ 60,000 units = $0.60 per unit produced Total cost (First quarter).................................................$228,000 Variable cost element ($0.60 per unit × 80,000 units)..............................................................................       48,000 Fixed cost element..........................................................$180,000 These fixed and variable cost estimates can be used to estimate the total manufacturing overhead cost for the fourth quarter as follows: Y = $180,000 + ($0.60 per unit)(60,000 units) Estimated fixed manufacturing overhead................ $180,000 Estimated variable manufacturing overhead $0.60 per unit × 60,000 units................................... 36,000 Estimated total manufacturing overhead cost......... $216,000 Total manufacturing cost and unit product cost: Direct materials.......................................................... $180,000 Direct labor................................................................. 72,000 Manufacturing overhead.......................................... 216,000 Total manufacturing costs........................................ $468,000 ÷ Number of units to be produced.......................... 60,000 = Unit product cost.................................................... $7.80 3-4 Chapter 3 Job-Order Costing Exercise 3-14 (continued) 2. The fixed portion of the manufacturing overhead cost is causing the unit product costs to fluctuate. The unit product cost increases as the level of production decreases because fixed overhead is being spread over fewer units. 3. The unit product cost can be stabilized by using a predetermined overhead rate that is based on expected activity for the entire year. The cost formula created in requirement 1 can be adapted to compute the annual predetermined overhead rate. The annual fixed manufacturing overhead is $720,000 ($180,000 per quarter × 4 quarters). The variable manufacturing overhead per unit is $0.60. The cost formula is as follows: Y = $720,000 + $0.60 per unit × 200,000 units Estimated fixed manufacturing overhead................ $720,000 Estimated variable manufacturing overhead $0.60 per unit × 200,000 units................................. 120,000 Estimated total manufacturing overhead cost......... $840,000 The annual predetermined overhead rate is computed as follows: Estimated total manufacturing overhead....................................................... $840,000 ÷ Estimated total units produced.............. 200,000 = Predetermined overhead rate................ $4.20 per unit The predetermined overhead rate of $4.20 would be used throughout the entire year, thereby eliminating the impact of seasonal variations in demand on unit product costs. 3-5 Chapter 3 Job-Order Costing Exercise 3-15 (15 minutes) 1. Milling Department: The estimated total manufacturing overhead cost in the Milling Department is computed as follows: Y = $390,000 + ($2.00 per MH)(60,000 MH) Estimated fixed manufacturing overhead................ $390,000 Estimated variable manufacturing overhead $2.00 per MH × 60,000 MHs..................................... 120,000 Estimated total manufacturing overhead cost......... $510,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead....................................................... $510,000 ÷ Estimated total machine-hours.............. 60,000 MHs = Predetermined overhead rate................ $8.50 per MH Assembly Department: The estimated total manufacturing overhead cost in the Assembly Department is computed as follows: Y = $500,000 + ($3.75 per DLH)(80,000 DLH) Estimated fixed manufacturing overhead................ $500,000 Estimated variable manufacturing overhead $3.75 per DLH × 80,000 DLHs.................................. 300,000 Estimated total manufacturing overhead cost......... $800,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead....................................................... $800,000 ÷ Estimated total direct labor-hours......... 80,000 DLHs = Predetermined overhead rate................ $10.00 per DLH 3-6 Chapter 3 Job-Order Costing Exercise 3-15 (continued) 2. Total manufacturing cost assigned to Job 407: Direct materials ($800 + $370)........................... $1,170 Direct labor ($45 + $160).................................... 205 Milling Department (90 MHs × $8.50 per MH). $765 Assembly Department (20 DLH × $10 per DLH).................................................................... 200 965 Total manufacturing cost................................... $2,340 3. Yes; if some jobs require a large amount of machine time and a small amount of labor time, they would be charged substantially less overhead cost if a plantwide rate based on direct labor hours were used. It appears, for example, that this would be true of Job 407 which required considerable machine time to complete, but required a relatively small amount of labor hours. 3-7 Chapter 3 Job-Order Costing Exercise 3-16 (15 minutes) 1. Item (a): Actual manufacturing overhead costs for the year. Item (b): Overhead cost applied to work in process for the year. Item (c): Cost of goods manufactured for the year. Item (d): Cost of goods sold for the year. 2. Manufacturing Overhead............................. 30,000 Cost of Goods Sold................................... 30,000 3. The overapplied overhead will be allocated to the other accounts on the basis of the amount of overhead applied during the year in the ending balance of each account: Work in process................................... $ 32,800 8 % Finished goods.................................... 41,000 10 Cost of goods sold.............................. 336,200 82 Total cost.............................................. $410,000 100 % Using these percentages, the journal entry would be as follows: Manufacturing Overhead............................ 30,000 Work in Process (8% × $30,000)............ 2,400 Finished Goods (10% × $30,000)........... 3,000 Cost of Goods Sold (82% × $30,000).... 24,600 3-8 Chapter 3 Job-Order Costing Exercise 3-17 (30 minutes) 1. The predetermined overhead rate is computed as follows: Y = $106,250 + $0.75 per MH × 85,000 MHs Estimated fixed manufacturing overhead................ $106,250 Estimated variable manufacturing overhead $0.75 per MH × 85,000 MHs..................................... 63,750 Estimated total manufacturing overhead cost......... $170,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead.... $170,000 ÷ Estimated total machine-hours.................. 85,000 MHs = Predetermined overhead rate.................... $2.00 per MH 2. The amount of overhead cost applied to Work in Process for the year would be: 80,000 machine-hours × $2.00 per machine-hour = $160,000. This amount is shown in entry (a) below: Manufacturing Overhead (Utilities) 14,000 (a) 160,000 (Insurance) 9,000 (Maintenance) 33,000 (Indirect materials) 7,000 (Indirect labor) 65,000 (Depreciation) 40,000 Balance 8,000 Work in Process (Direct materials) 530,000 (Direct labor) 85,000 (Overhead) (a) 160,000 3. Overhead is underapplied by $8,000 for the year, as shown in the Manufacturing Overhead account above. The entry to close out this balance to Cost of Goods Sold would be: Cost of Goods Sold......................................... 8,000 3-9 Chapter 3 Job-Order Costing Manufacturing Overhead........................... 8,000 3-10 Chapter 3 Job-Order Costing Exercise 3-17 (continued) 4. When overhead is applied using a predetermined rate based on machine-hours, it is assumed that overhead cost is proportional to machine-hours. When the actual level of activity turns out to be 80,000 machine-hours, the costing system assumes that the overhead will be 80,000 machine-hours × $2.00 per machine-hour, or $160,000. This is a drop of $10,000 from the initial estimated total manufacturing overhead cost of $170,000. However, the actual total manufacturing overhead did not drop by this much. The actual total manufacturing overhead was $168,000—a drop of only $2,000 from the estimate. The manufacturing overhead did not decline by the full $10,000 because of the existence of fixed costs and/or because overhead spending was not under control. These issues will be covered in more detail in later chapters. 3-11 Chapter 3 Job-Order Costing Exercise 3-18 (45 minutes) 1 a. The estimated total manufacturing overhead cost is computed as follows: Y = $1,100,000 + $5.00 per MH × 50,000 MHs Estimated fixed manufacturing overhead................ $1,100,000 Estimated variable manufacturing overhead $5.00 per MH × 50,000 MHs..................................... 250,000 Estimated total manufacturing overhead cost......... $1,350,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead.... $1,350,00 0 ÷ Estimated total machine-hours (MHs)....... 50,000 MHs = Predetermined overhead rate.................... $27.00 per MH 1 b and 1 c. Total manufacturing cost assigned to Jobs D-75 and C-100: D-75 C-100 Direct materials................................... $  700,000 $  550,000 Direct labor.......................................... 360,000 400,000 Manufacturing overhead applied ($27.00 per MH × 20,000 MHs; $27.00 per MH × 30,000 MHs)........ 540,000 810,000 Total manufacturing cost................... $1,600,000 $1,760,000 Bid prices for Jobs D-75 and C-100: D-75 C-100 Total manufacturing cost................... $1,600,000 $1,760,000 × Markup percentage......................... 150% 150% = Bid price............................................. $2,400,000 $2,640,000 1 d. Because the company has no beginning or ending inventories and only Jobs D-75 and C-100 were started, completed, and sold during the year, the cost of goods sold is equal to the sum of the manufacturing costs assigned to both jobs of $3,360,000 (= $1,600,000 + $1,760,000). 3-12 Chapter 3 Job-Order Costing Exercise 3-18 (continued) 2 a. Molding Department: The estimated total manufacturing overhead cost in the Molding Department is computed as follows: Y = $800,000 + $5.00 per MH × 20,000 MH Estimated fixed manufacturing overhead................ $800,000 Estimated variable manufacturing overhead $5.00 per MH × 20,000 MHs..................................... 100,000 Estimated total manufacturing overhead cost......... $900,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead... $900,000 ÷ Estimated total machine-hours................. 20,000 MHs = Predetermined overhead rate................... $45.00 per MH Fabrication Department: The estimated total manufacturing overhead cost in the Fabrication Department is computed as follows: Y = $300,000 + $5.00 per MH × 30,000 MH Estimated fixed manufacturing overhead................ $300,000 Estimated variable manufacturing overhead $5.00 per MH × 30,000 MHs..................................... 150,000 Estimated total manufacturing overhead cost......... $450,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead... $450,000 ÷ Estimated total direct labor-hours............ 30,000 MHs = Predetermined overhead rate................... $15.00 per MH 3-13 Chapter 3 Job-Order Costing Exercise 3-18 (continued) 2b and 2c. Total manufacturing costs assigned to Jobs D-75 and C-100: D-75 C-100 Direct materials............................ $700,000 $550,000 Direct labor................................... 360,000 400,000 Molding Department (15,000 MHs × $45 per MH; 5,000 MHs × $45 per MH)........ 675,000 225,000 Fabrication Department (5,000 MH × $15 per MH; 25,000 MH × $15 per MH)........ 75,000 375,000 Total manufacturing cost............ $1,810,000 $1,550,000 Bid prices for Jobs D-75 and C-100: D-75 C-100 Total manufacturing cost............ $1,810,000 $1,550,000 × Markup percentage.................. 150% 150% = Bid price..................................... $2,715,000 $2,325,000 2 d. Because the company has no beginning or ending inventories and only Jobs D-75 and C-100 were started, completed, and sold during the year, the cost of goods sold is equal to the sum of the manufacturing costs assigned to both jobs $3,360,000 (= $1,810,000 + $1,550,000). 3. The plantwide and departmental approaches produce identical cost of goods sold figures. However, these two approaches lead to different bid prices for Jobs D-75 and C-100. The bid price for Job D- 75 using the departmental approach is $315,000 higher than the bid price using the plantwide approach. This is because the departmental cost pools reflect the fact that Job D-75 is an intensive user of Molding machine-hours. The overhead rate in Molding ($45) is three times higher than the overhead rate in Fabrication ($15). Conversely, Job C-100 is an intensive user of the less-expensive Fabrication machine-hours, so its departmental bid price is $315,000 lower than the plantwide bid price. 3-14 Chapter 3 Job-Order Costing Exercise 3-18 (continued) Whether a job-order costing system has only one plantwide overhead cost pool or numerous departmental overhead cost pools does not usually have an important impact on the accuracy of the cost of goods sold reported for the company as a whole. However, it can have a huge impact on internal decisions with respect to individual jobs, such as establishing bid prices for those jobs. Job- order costing systems that rely on one plantwide overhead cost pool are commonly used to value ending inventories and cost of goods sold for external reporting purposes, but they can create costing inaccuracies for individual jobs that adversely influence internal decision making. Exercise 3-19 (30 minutes) 1. a. Raw Materials................................ 315,000 Accounts Payable.................... 315,000 b. Work in Process............................. 216,000 Manufacturing Overhead............ 54,000 Raw Materials.......................... 270,000 c. Work in Process............................. 80,000 Manufacturing Overhead............ 110,000 Wages and Salaries Payable. . 190,000 d. Manufacturing Overhead............ 63,000 Accumulated Depreciation..... 63,000 e. Manufacturing Overhead............ 85,000 Accounts Payable.................... 85,000 f. Work in Process............................. 300,000 Manufacturing Overhead....... 300,000 3-15 Chapter 3 Job-Order Costing 40,000 MHs × $7.50 per MH = $300,000. 2. Manufacturing Overhead Work in Process 3-16 Chapter 3 Job-Order Costing (b) 54,000 (f) 300,000 (b) 216,000 (c) 110,000 (c) 80,000 (d) 63,000 (f) 300,000 (e) 85,000 3. The cost of the completed job would be $596,000 as shown in the Work in Process T-account above. The entry for item (g) would be: Finished Goods.................................. 596,000 Work in Process........................... 596,000 4. The unit product cost on the job cost sheet would be: $596,000 ÷ 8,000 units = $74.50 per unit. Exercise 3-20 (30 minutes) 1. Since $320,000 of studio overhead cost was applied to Work in Process on the basis of $200,000 of direct staff costs, the apparent predetermined overhead rate was 160%: 2. The Krimmer Corporation Headquarters project is the only job remaining in Work in Process at the end of the month; therefore, the entire $40,000 balance in the Work in Process account at that point must apply to it. Recognizing that the predetermined overhead rate is 160% of direct staff costs, the following computation can be made: Total cost added to the Krimmer Corporation Headquarters project.. $40,000 Less: Direct staff costs................................... $13,500 Studio overhead cost 3-17 Chapter 3 Job-Order Costing ($13,500 × 160%)................................ 21,600 35,100 Costs of subcontracted work............... $ 4,900 With this information, we can now complete the job cost sheet for the Krimmer Corporation Headquarters project: Costs of subcontracted work.......... $ 4,900 Direct staff costs............................... 13,500 Studio overhead............................... 21,600 Total cost to January 31................... $40,000 Problem 3-25 (120 minutes) 1. a. Raw Materials......................................... 142,000 Accounts Payable.............................. 142,000 b. Work in Process...................................... 150,000 Raw Materials.................................... 150,000 c. Manufacturing Overhead...................... 21,000 Accounts Payable.............................. 21,000 d. Work in Process...................................... 216,000 Manufacturing Overhead...................... 90,000 Salaries Expense..................................... 145,000 Salaries and Wages Payable............ 451,000 e. Manufacturing Overhead...................... 15,000 Accounts Payable.............................. 15,000 f. Advertising Expense.............................. 130,000 Accounts Payable.............................. 130,000 g. Manufacturing Overhead...................... 45,000 Depreciation Expense............................ 5,000 Accumulated Depreciation.............. 50,000 h. Manufacturing Overhead...................... 72,000 Rent Expense.......................................... 18,000 Accounts Payable.............................. 90,000 i. Miscellaneous Expense.......................... 17,000 Accounts Payable.............................. 17,000 3-18 Chapter 3 Job-Order Costing j. Work in Process...................................... 240,000 Manufacturing Overhead................ 240,000 $150,000 direct materials cost × 160% = $240,000 applied. k. Finished Goods....................................... 590,000 Work in Process................................ 590,000 l. Accounts Receivable.............................. 1,000,000 Sales................................................... 1,000,000 Cost of Goods Sold................................. 600,000 Finished Goods................................. 600,000 2. Accounts Receivable Raw Materials (l) 1,000,000 Bal. 18,000 (b) 150,000 (a) 142,000 Bal. 10,000 Work in Process Finished Goods Bal. 24,000 (k) 590,000 Bal. 35,000 (l) 600,000 (b) 150,000 (k) 590,000 (d) 216,000 (j) 240,000 Bal. 40,000 Bal. 25,000 Manufacturing Overhead Accounts Payable (c) 21,000 (j) 240,000 (a) 142,000 (d) 90,000 (c) 21,000 (e) 15,000 (e) 15,000 (g) 45,000 (f) 130,000 (h) 72,000 (h) 90,000 Bal. 3,000 (i) 17,000 3-19 Chapter 3 Job-Order Costing Accumulated Depreciation Depreciation Expense (g) 50,000 (g) 5,000 Salaries & Wages Payable Salaries Expense (d) 451,000 (d) 145,000 Miscellaneous Expense Advertising Expense (i) 17,000 (f) 130,000 Rent Expense Cost of Goods Sold (h) 18,000 (l) 600,000 Sales (l) 1,000,000 3. Southworth Company Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning.................. $ 18,000 Add: Purchases of raw materials........................   142,000 Materials available for use.................................. 160,000 Deduct: Raw materials inventory, ending......... 10,000 Materials used in production.............................. $150,000 Direct labor............................................................... 216,000 Manufacturing overhead applied to work in process................................................................... 240,000 Total manufacturing cost....................................... 606,000 Add: Work in process, beginning........................... 24,000 630,000 Deduct: Work in process, ending.......................... 40,000 Cost of goods manufactured................................. $590,000 4. Cost of Goods Sold............................................. 3,000 Manufacturing Overhead............................ 3,000 3-20 Chapter 3 Job-Order Costing Schedule of cost of goods sold: Finished goods inventory, beginning............ $ 35,000 Add: Cost of goods manufactured................. 590,000 Cost of goods available for sale..................... 625,000 Deduct: Finished goods inventory, ending... 25,000 Unadjusted cost of goods sold...................... 600,000 Add: Underapplied overhead......................... 3,000 Adjusted cost of goods sold........................... $603,000 5. Southworth Company Income Statement Sales................................................................. $1,000,000 Cost of goods sold.......................................... 603,000 Gross margin................................................... 397,000 Selling and administrative expenses: Salaries expense.......................................... $145,000 Advertising expense.................................... 130,000 Depreciation expense................................. 5,000 Rent expense................................................ 18,000 Miscellaneous expense............................... 17,000 315,000 Net operating income.................................... $         82,000 6. Direct materials.................................................................. $ 3,600 Direct labor (400 hours × $11 per hour).......................... 4,400 Manufacturing overhead cost applied (160% × $3,600).............................................................................. 5,760 Total manufacturing cost.................................................. 13,760 Add markup (75% × $13,760)............................................ 10,320 Total billed price of Job 218............................................... $24,080 $24,080 ÷ 500 units = $48.16 per unit. 3-21 Chapter 3 Job-Order Costing Problem 3-26 (30 minutes) 1. Preparation Department: The estimated total manufacturing overhead cost in the Preparation Department is computed as follows: Y = $256,000 + $2.00 per MH × 80,000 MH Estimated fixed manufacturing overhead................ $256,000 Estimated variable manufacturing overhead: $2.00 per MH × 80,000 MHs..................................... 160,000 Estimated total manufacturing overhead cost......... $416,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead. . $416,000 ÷ Estimated total machine-hours................. 80,000 MHs = Predetermined overhead rate.................. $5.20 per MH Fabrication Department: The estimated total manufacturing overhead cost in the Fabrication Department is computed as follows: Y = $520,000 + $4.00 per DLH × 50,000 DLH Estimated fixed manufacturing overhead................ $520,000 Estimated variable manufacturing overhead: $4.00 per DLH × 50,000 DLHs.................................. 200,000 Estimated total manufacturing overhead cost......... $720,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead. . $720,000 ÷ Estimated total machine-hours................. 50,000 DLHs = Predetermined overhead rate.................. $14.40 per DLH 3-22 Chapter 3 Job-Order Costing Problem 3-26 (continued) 2. Preparation Department overhead applied: 350 machine-hours × $5.20 per machine-hour... $1,820 Fabrication Department overhead applied: 130 direct labor-hours × $14.40 per labor- hour.......................................................................   1,872 Total overhead cost................................................... $3,692 3. Total cost of Job 127: Preparatio n Fabrication Total Direct materials................ $  940 $1,200 $2,140 Direct labor....................... 710 980 1,690 Manufacturing overhead........................ 1,820 1,872 3,692 Total cost........................... $3,470 $4,052 $7,522 Unit product cost for Job 127: Total manufacturing cost............................ $7,522 ÷ Number of units in the job...................... 25 units = Unit product cost...................................... $300.88 per unit 4. Preparatio n Fabrication Manufacturing overhead cost incurred................................................... $390,000 $740,000 Manufacturing overhead cost applied: 73,000 machine-hours × $5.20 per machine-hour...................................... 379,600 54,000 direct labor-hours × $14.40 per direct labor-hour.......................... 777,600 Underapplied (or overapplied) overhead................................................. $ 10,400 $(37,600) 3-23 Chapter 3 Job-Order Costing Problem 3-27 (45 minutes) 1. a. Raw Materials............................................ 160,000 Accounts Payable................................ 160,000 b. Work in Process......................................... 120,000 Manufacturing Overhead........................ 20,000 Raw Materials...................................... 140,000 c. Work in Process......................................... 90,000 Manufacturing Overhead........................ 60,000 Sales Commissions Expense.................... 20,000 Salaries Expense....................................... 50,000 Salaries and Wages Payable.............. 220,000 d. Manufacturing Overhead........................ 13,000 Insurance Expense................................... 5,000 Prepaid Insurance............................... 18,000 e. Manufacturing Overhead........................ 10,000 Accounts Payable................................ 10,000 f. Advertising Expense................................. 15,000 Accounts Payable................................ 15,000 g. Manufacturing Overhead........................ 20,000 Depreciation Expense.............................. 5,000 Accumulated Depreciation................ 25,000 h. Work in Process......................................... 110,000 Manufacturing Overhead................... 110,000 50,000 actual MHs × £2.20 per MH = £110,000 overhead applied. 3-24 Chapter 3 Job-Order Costing Problem 3-27 (continued) i. Finished Goods..................................... 310,000 Work in Process.............................. 310,000 j. Accounts Receivable............................. 498,000 Sales................................................. 498,000 Cost of Goods S