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The following transactions were incurred by Gregor Fabricators during January, the first month of its fiscal year.
Requirements
(Exercise 1)E3-45BRecord journal entries
1. Record the proper journal entry for each transaction.
a. $205,000 of materials was purchased on account.
b. $170,000 of materials was used in production; of this amount, $152,000 was used on specific jobs.
c. Manufacturing labor and salaries for the month totaled $255,000. $215,000 of the total manufacturing labor and salaries was traced to specific jobs, and the remainder was indirect labor used in the factory.
d. The company recorded $25,000 of depreciation on the plant and plant equipment. The company also received a plant utility bill for $12,000 which will be paid at a later date.
e. $79,000 of manufacturing overhead was allocated to specific jobs.
f. The company received a bill for CAD design services for $1,000.
By the end of January, was manufacturing overhead overallocated or under-allocated? By how much?

(Exercise 2) S4-16Quality initiative decision
Boswell manufactures high-quality speakers. Suppose Boswell is considering spending the following amounts on a new quality program:
Additional 20 minutes of testing for each speaker – $607,000
Negotiating with and training suppliers to obtain higher quality materials and on- time delivery – $300,000
Redesigning the speakers to make them easier to manufacture 1,402,000
Boswell expects this quality program to save costs as follows:
Reduced warranty repair costs $205,000
Avoid inspection of raw materials $403,000
Rework avoided because of fewer defective units $652,000
It also expects this program to avoid lost profits from the following:
Lost sales due to disappointed customers – $853,000
Loss production time due to rework – $305,000
1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).
2. Should Boswell implement the quality program? Give your reasons.
(Exercise 3) P5 57AProcess costing in a single processing department
Decker Cosmetics produces a lip balm used for cold-weather sports. The balm is manufactured in a single processing department. No lip balm was in process on May 31, and Decker Lips started production on 20,000 lip balm tubes during June. Direct materials are added at the beginning of the process, but conversion costs are incurred evenly throughout the process. Completed production for June totaled 15,000 units. The June 30 work in process was 30% of the way through the production process. Direct materials costing $5,800 were placed in production during June, and direct labor of $3,400 and manufacturing overhead of $560 were assigned to the process.
Requirements
1. Draw a timeline for Decker Cosmetics.
2. Use the timeline to help you compute the total equivalent units and the cost per equivalent unit for June.
3.Assign total costs to (a) units completed and transferred to Finished Goods and (b) units still in process at June 30.
4.Prepare a T-account for Work in Process Inventory to show activity during June, including the June 30 balance.
Decker Cosmetics produces a lip balm used for cold-weather sports. The balm is manufactured in a single processing department. No lip balm was in process on May 31, and Decker Lips started production on 20,000 lip balm tubes during June. Direct materials are added at the beginning of the process, but conversion costs are incurred evenly throughout the process. Completed production for June totaled 15,000 units. The June 30 work in process was 30% of the way through the production process. Direct materials costing $5,800 were placed in production during June, and direct labor of $3,400 and manufacturing overhead of $560 were assigned to the process.
(Exercise 4) P5 60APrepare a production cost report and journal
Requirements
1. Draw a timeline for Decker Cosmetics.
2. Use the timeline to help you compute the total equivalent units and the cost per equivalent unit for June.
3. Assign total costs to (a) units completed and transferred to Finished Goods and (b) units still in process at June 30.
4. Prepare a T-account for Work in Process Inventory to show activity during June, including the June 30 balance.

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