Abbott Inc.  

Christopher’s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs. Inventory balances at the beginning of 2018 follow:

Raw Materials Inventory: 15,700

Work in Process: 6,000

Finished Goods Inventory: 20,100

The following transactions occurred during January:

(a) Purchased materials on account for $26,900.
(b) Issued materials to production totaling $20,800, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials.
(c) Payroll costs totaling $20,600 were recorded as follows:
    $12,000 for assembly workers
     3,000 for factory supervision
     2,900 for administrative personnel
      2,700 for sales commissions
(d) Recorded depreciation: $5,800 for factory machines, $1,000 for the copier used in the administrative office.
(e) Recorded $1,700 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense.
(f) Paid $5,300 in other factory costs in cash.
(g) Applied manufacturing overhead at a rate of 200 percent of direct labor cost.
(h) Completed all jobs but one; the job cost sheet for the uncompleted job shows $2,400 for direct materials, $2,100 for direct labor, and $4,200 for applied overhead.
(i) Sold jobs costing $51,200. The revenue earned on these jobs was $66,560.

Required:
1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts:

1. Raw Materials Inventory.
2. Work in Process Inventory.
3. Finished Goods Inventory.
4. Cost of Goods Sold.
5. Manufacturing Overhead.
6. Selling, General, and Administrative Expenses.
7. Sales Revenue.

2. Determine how much gross profit the company would report during the month of January before any adjustment is made for the overhead balance.

3. Determine the amount of over- or underapplied overhead.

4. Compute adjusted gross profit assuming that any over- or underapplied overhead balance is adjusted directly to Cost of Goods Sold.

The following information is departmental cost allocation with two service departments and two production departments.

REQ1. What is the amount of service department cost allocated to P1 and P2 using the direct method?

REQ2. What is the total cost in P1 and in P2 after allocation using the direct method?

REQ3. What is the total cost in P1 and P2 and what is the amount of service department cost allocated to P1 and P2 using the step method with S1 going first?

REQ4. What is the amount of service department cost allocated to P1 and P2 using the direct method if the cost in P1 is changed from $100,000 to $120,000?

Christopher’s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs. Inventory balances at the beginning of 2016 follow:

The following transactions occurred during January:
(a) Purchased materials on account for $26,600.
(b) Issued materials to production totaling $20,300, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials.
(c) Payroll costs totaling $16,600 were recorded as follows:
    $10,400 for assembly workers
     3,000 for factory supervision
     1,600 for administrative personnel
      1,600 for sales commissions
(d) Recorded depreciation: $4,600 for machines, $500 for the copier used in the administrative office.
(e) Recorded $1,000 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense.
(f) Paid $6,300 in other factory costs in cash.
(g) Applied manufacturing overhead at a rate of 200 percent of direct labor cost.
(h) Completed all jobs but one; the job cost sheet for this job shows $2,100 for direct materials, $2,200 for direct labor, and $4,400 for applied overhead.
(i) Sold jobs costing $51,200. The revenue earned on these jobs was $66,560.

Required:
1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: (Post all amounts separately. Do not combine/add any dollar amounts when posting to the t-accounts.)

1. Raw Materials Inventory.
2. Work in Process Inventory.
3. Finished Goods Inventory.
4. Cost of Goods Sold.
5. Selling, General, and Administrative Expenses.
6. Sales Revenue.
7. Other accounts (Cash, Payables, etc.).

2. Determine how much gross profit the company would report during the month of January before any adjustment is made for the overhead balance.



3. Determine the amount of over- or underapplied overhead.



4. Compute adjusted gross profit assuming that any over- or underapplied overhead balance is adjusted directly to Cost of Goods Sold.

Christopher’s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs. Inventory balances at the beginning of 2016 follow:

The following transactions occurred during January:
(a) Purchased materials on account for $26,300.
(b) Issued materials to production totaling $20,800, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials.
(c) Payroll costs totaling $17,100 were recorded as follows:
    $10,800 for assembly workers
     1,400 for factory supervision
     2,800 for administrative personnel
      2,100 for sales commissions
(d) Recorded depreciation: $5,900 for machines, $1,100 for the copier used in the administrative office.
(e) Recorded $1,000 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense.
(f) Paid $5,600 in other factory costs in cash.
(g) Applied manufacturing overhead at a rate of 200 percent of direct labor cost.
(h) Completed all jobs but one; the job cost sheet for this job shows $2,100 for direct materials, $2,200 for direct labor, and $4,400 for applied overhead.
(i) Sold jobs costing $50,500. The revenue earned on these jobs was $65,650.

Required:
1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: (Post all amounts separately. Do not combine/add any dollar amounts when posting to the t-accounts.)

Raw Materials Inventory.

Work in Process Inventory.

Finished Goods Inventory.

Cost of Goods Sold.

Selling, General, and Administrative Expenses.

Sales Revenue.

Other accounts (Cash, Payables, etc.).

2. Determine how much gross profit the company would report during the month of January before any adjustment is made for the overhead balance.



3. Determine the amount of over- or underapplied overhead.



4. Compute adjusted gross profit assuming that any over- or underapplied overhead balance is adjusted directly to Cost of Goods Sold.

1. With double-digit annual percentage increases in the cost of health insurance, more and more workers are likely to lack health insurance coverage (USA Today, January 23, 2004). The following sample data provide a comparison of workers with and without health insurance coverage for small, medium, and large companies. For the purposes of this study, small companies are companies that have fewer than 100 employees. Medium companies have 100 to 999 employees, and large companies have 1000 or more employees. Sample data are reported for 50 employees of small companies, 75 employees of medium companies, and 100 employees of large companies.

1. Conduct a test of independence to determine whether employee health insurance coverage is independent of the size of the company. Use  = .05. Use Table 12.4.
   
   Compute the value of the  ² test statistic (to 2 decimals).
   
   
   The p value is ?
   
   
2. The USA Today article indicated employees of small companies are more likely to lack health insurance coverage. Calculate the percentages of employees without health insurance based on company size (to the nearest whole number).

   Small	%
   Medium	%
   Large	%

   SMALL ? , MEDIUM? LARGE ?

2.

2. During the first 13 weeks of the television season, the Saturday evening 8:00 P.M. to 9:00 P.M. audience proportions were recorded as ABC 30%, CBS 27%, NBC 25%, and independents 18%. A sample of 300 homes two weeks after a Saturday night schedule revision yielded the following viewing audience data: ABC 93 homes, CBS 63 homes, NBC 88 homes, and independents 56 homes. Test with  = .05 to determine whether the viewing audience proportions changed. Use Table 12.4.

Round your answers to two decimal places.

χ ² = ??

Christopher’s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs. Inventory balances at the beginning of 2018 follow: Raw Materials Inventory $ 16,700 Work in Process Inventory 6,200 Finished Goods Inventory 21,000 The following transactions occurred during January: (a) Purchased materials on account for $27,800. (b) Issued materials to production totaling $20,500, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials. (c) Payroll costs totaling $17,100 were recorded as follows: $10,900 for assembly workers 2,700 for factory supervision 1,200 for administrative personnel 2,300 for sales commissions (d) Recorded depreciation: $4,100 for factory machines, $1,400 for the copier used in the administrative office. (e) Recorded $1,300 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense. (f) Paid $6,000 in other factory costs in cash. (g) Applied manufacturing overhead at a rate of 200 percent of direct labor cost. (h) Completed all jobs but one; the job cost sheet for the uncompleted job shows $2,500 for direct materials, $2,000 for direct labor, and $4,000 for applied overhead. (i) Sold jobs costing $51,200. The revenue earned on these jobs was $66,560. Required: 1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: Raw Materials Inventory. Work in Process Inventory. Finished Goods Inventory. Cost of Goods Sold. Manufacturing Overhead. Selling, General, and Administrative Expenses. Sales Revenue. 2. Determine how much gross profit the company would report during the month of January before any adjustment is made for the overhead balance. 3. Determine the amount of over- or underapplied overhead. 4. Compute adjusted gross profit assuming that any over- or underapplied overhead balance is adjusted directly to Cost of Goods Sold

The following information is departmental cost allocation with two service departments and two production departments.

What is the amount of service department cost allocated to P1 and P2 using the direct method?

Christopher’s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs. Inventory balances at the beginning of 2016 follow: Raw Materials Inventory $ 17,000 Work in Process Inventory 6,300 Finished Goods Inventory 20,500 The following transactions occurred during January: (a) Purchased materials on account for $26,400. (b) Issued materials to production totaling $22,000, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials. (c) Payroll costs totaling $19,000 were recorded as follows: $11,300 for assembly workers 1,500 for factory supervision 2,800 for administrative personnel 3,400 for sales commissions (d) Recorded depreciation: $5,200 for machines, $600 for the copier used in the administrative office. (e) Recorded $1,900 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense. (f) Paid $4,900 in other factory costs in cash. (g) Applied manufacturing overhead at a rate of 200 percent of direct labor cost. (h) Completed all jobs but one; the job cost sheet for this job shows $2,200 for direct materials, $2,500 for direct labor, and $5,000 for applied overhead. (i) Sold jobs costing $51,500. The revenue earned on these jobs was $66,950. Required: 1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: (Post all amounts separately. Do not combine/add any dollar amounts when posting to the t-accounts.) Raw Materials Inventory. Work in Process Inventory. Finished Goods Inventory. Cost of Goods Sold. Selling, General, and Administrative Expenses. Sales Revenue. Other accounts (Cash, Payables, etc.).