Fisher Company Solutions

1.

Journal entries:

(a)

Raw Materials         

60,000

        Accounts Payable        

60,000

(b)

Work in Process        

50,000

Manufacturing Overhead        

2,000

          Raw Materials         

52,000

(c)

Work in Process         

60,000

Manufacturing Overhead        

15,000 

        Salaries and Wages Payable        

75,000

(d)

Manufacturing Overhead         

40,000

        Cash         

40,000

(e)

Manufacturing Overhead         

13,000

          Property Taxes Payable         

13,000

(f)

Manufacturing Overhead         

7,000

          Prepaid Insurance         

7,000

(g)

Manufacturing Overhead         

18,000

          Accumulated Depreciation         

18,000

(h)

Work in Process         

90,000

          Manufacturing Overhead         

90,000*

Predetermined overhead rate = Budgeted manufacturing overhead = 1,200,000 

                                                           Budgeted machine hours                 200,000

                                                                                                                  = $6/MH

*Applied manufacturing overhead = 15,000 machine hours × $6 per MH.

(i)

Salaries Expense         

30,000

                Salaries and Wages Payable        

30,000

(j)

Depreciation Expense         

7,000

        Accumulated Depreciation         

7,000

(k)

Advertising Expense         

42,000

        Cash …..         

42,000

(l)

Other Selling and Administrative Expense         

8,000

        Cash….         

8,000

(m)

Finished Goods         

158,000

        Work in Process         

158,000

(n)

Accounts Receivable         

225,000

        Sales         

225,000

Cost of Goods Sold         

118,500

        Finished Goods         

118,500

2.

T-accounts and posting of journal entries:

Accounts Receivable

Accounts Payable

Bal

XXX

XXX

Bal

(n)

  225,000

60,000

(a)

Prepaid Insurance

Raw Materials

Bal.

XXX

7,000

(f)

Bal.

7,000

52,000

(b)

(a)

60,000

Bal.

15,000

Salaries and Wages Payable

Sales

Bal.

XXX

225,000

(n)

75,000

(c)

30,000

(i)

Work in Process

Manufacturing Overhead

Bal.

30,000

158,000

(m)

(b)

2,000

90,000

(h)

(b)

50,000

(c)

15,000

(c)

60,000

(d)

40,000

(h)

90,000

(e)

13,000

Bal.

72,000

(f)

7,000

(g)

18,000

Bal.

5,000

Property Taxes Payable

Cost of Goods Sold

XXX

Bal.

(n)

118,500

13,000

(e)

Finished Goods

Depreciation Expense

Bal.

10,000

(j)

7,000

(m)

158,000

118,500

(n)

Bal.

49,500

Accumulated Depreciation

Advertising Expense

XXX

Bal.

(k)

42,000

18,000

(g)

7,000

(j)

Other Selling & Admin Expense

Salaries Expense

(l)

8,000

(i)

30,000

Cash

Bal

XXX

40,000

             (d)

42,000

(k)

  8,000

(l)

3.

(a)

Calculation of actual overhead:

Indirect material         

$    2,000

Indirect Labor          

15,000

Depreciation: factory building and equipment        

18,000

Rent: factory equipment         

16,000

Utilities        

21,000

Property taxes        

13,000

Insurance        

  7,000

Miscellaneous Factory Costs         

3,000

Total actual overhead        

$95,000

(b)

Underapplied overhead

=

[pic 1]

=

$95,000 – $90,000*

=

$5,000 underapplied

*$90,000 = 15,000 direct-labor hours × $6 per hour.

(c)

Cost of Goods Sold         

5,000

                Manufacturing Overhead        

5,000

4.

FISHER COMPANY
Schedule of Cost of Goods Manufactured
For the Month of APRIL

Direct material:

        Raw-material inventory, April 1        

$7,000

        Add: Purchases of raw material        

   60,000

        Raw material available for use        

$67,000

        Deduct: Raw-material inventory, April 30         

 15,000

        Raw material used        

$ 52,000

       Less: Indirect materials included in

       manufacturing overhead ........................................

2,000

$50,000

Direct labor        

60,000 

Manufacturing overhead:

       Indirect material         

$    2,000

       Indirect Labor          

15,000

       Depreciation: factory building and equipment        

18,000

       Rent: factory equipment         

16,000

       Utilities        

21,000

       Property taxes        

13,000

       Insurance        

  7,000

       Miscellaneous Factory Costs         

3,000

             Total actual manufacturing overhead .............

95,000

             Less: Underapplied overhead .........................

(5,000)

       Overhead applied to work in process ...................

90,000

Total manufacturing costs        

$ 200,000 

Add: Work-in-process inventory, April 1        

  30,000 

Subtotal        

$230,000 

Deduct: Work-in-process inventory, April 30        

 72,000 

Cost of goods manufactured        

$  158,000†