1.) Trim Force Corp. had the following information in their accounting records:
Work in process inventory, beginning balance
Cost of direct materials used
Direct labor cost applied to production
Cost of finished goods manufactured
$50,000
$350,000
$200,000
$750,000
Manufacturing overhead during production was $250,000. What was the work in process
inventory on hand at the end of the year?
2.) Walsh Corp. uses direct labor hours to determine their applied manufacturing overhead.
They use a rate of $30 per direct labor hour. During the production period, company
employees worked 10,000 direct labor hours, and had actual overhead costs of
$305,000.
a.) Record the year-end journal entry to close out the Manufacturing Overhead account
to the Cost of Goods Sold account.
b.) Was manufacturing overhead underapplied or was it overapplied?
3.) Sorin Corp. uses process costing for its two production departments: Cutting and
Painting. The company’s manufacturing information for the month of August is provided
below:
Beginning work in process
Costs transferred in
Costs incurred in Aug
Ending work in process
Cutting
$1,000
?
$3,500
$2,000
Painting
$1,200
?
$5,000
$2,500
a.) Record the transfer costs from the cutting department to the painting department in
Aug.
b.) Record the transfer costs from the painting department to the finished goods
inventory account in Aug.
4.) Badin Corp. has the following information about its most popular product line:
Sales price per unit
Variable cost per unit
Total fixed manufacturing & overhead costs
$50
$25
$400,000
Compute the following:
a.) Unit contribution margin.
b.) Units that must be sold to break even.
c.) Units that must be sold to earn an operating income of $500,000.
5.) Complete Dillon Corp.’s flexible budget for 75,000 units using the information listed
below:
Sales
Cost of Goods Sold
Gross Profit on Sales
Operating expenses ($10,000 of it is fixed)
Operating Income
Income Taxes (30% of operating income)
Net Income
25,000 Units
$375,000
$250,000
$125,000
$35,000
$90,000
$27,000
$63,000
50,000 Units
$750,000
$500,000
$250,000
$60,000
$190,000
$57,000
$133,000
75,000 Units
Assume that cost of goods sold and any variable operating expenses vary directly with sales and
that income taxes remain constant at 30%.
6.) Del Sol Healthcare is considering two capital investment proposals. The information for
both projects is listed below:
Cost of the investment
Estimated salvage value
Average estimated net income
Proposal #1
$250,000
$25,000
$50,000
Proposal #2
$300,000
$30,000
$60,000
Calculate the return on average investment for both proposals and discuss which one would be
the best option for investment.
