Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be$500,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $195,000. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of$325,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $130,000. Actual manufacturing overhead for year 2 was$825,000. Manufacturing overhead is applied based on direct labor costs.

Required
How much overhead was applied to each job in year 2?

Tappan, Inc., manufactures 1 product and accounts for costs using a job cost system. You have obtained the following information from the corporation’s books and records for the year ended December 31, Year 1:

• Total manufacturing cost during the year was $2,000,000 based on actual direct material, actual direct labor, and applied manufacturing overhead.
• Manufacturing overhead was applied to work in process at 62.5 percent of direct labor dollars. Applied manufacturing overhead for the year was 25 percent of the total manufacturing cost during the year.

Required
Calculate actual direct material used, actual direct labor, and applied manufacturing overhead. ( Hint: The total of these costs is$2,000,000.)

Stan Garner resides in Illinois and promotes boxing matches for SuperSports, Inc., an Illinois corporation. Garner created the promotional concept of the "Ages" fights-a series of three boxing matches pitting an older fighter (George Foreman) against a younger fighter, such as John Ruiz or Riddick Bowe. The concept included titles for each of the three fights ("Challenge of the Ages," "Battle of the Ages," and "Fight of the Ages"), as well as promotional epithets to characterize the two fighters ("the Foreman Factor"). Garner contacted George Foreman and his manager, who both reside in Texas, to sell the idea, and they arranged a meeting at Caesar's Palace in Las Vegas, Nevada. At some point in the negotiations, Foreman's manager signed a nondisclosure agreement prohibiting him from disclosing Garner's promotional concepts unless they signed a contract. Nevertheless, after negotiations between Garner and Foreman fell through, Foreman used Garner's "Battle of the Ages" concept to promote a subsequent fight. Garner filed a lawsuit against Foreman and his manager in a federal district court in Illinois, alleging breach of contract. Using the information presented in the chapter, answer the following questions.

On what basis might the federal district court in Illinois exercise jurisdiction in this case?

Partially completed T-accounts and additional data for Pine Ridge Corporation for the month of February follow:

$$\begin{array}{ c } \hspace{2pt}\textbf{Materials Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 56,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}227,000}&\ \text{{\text{\hspace{35pt}{190,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Finished Goods Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 200,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}345,000}&\ \text{{\text{\hspace{35pt}{ 251,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Manufacturing Overhead Control} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}155,000}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Work-in-Process Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}BB (2/1) 100,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{}\hspace{21pt} \text{\hspace{12pt}Labor 187,500}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{12pt}150,000{}}}}& \end{array}$$

Additional information for February follows:

• Labor wage rate was $25 per hour.
• During the month, sales revenue was$600,000, and selling and administrative costs were $105,000.
• This company has no indirect materials or supplies.
• The company applies manufacturing overhead on the basis of direct labor costs.

Required
What was the operating profit for February? Any over- or underapplied overhead is written off to Cost of Goods Sold.

Partially completed T-accounts and additional data for Pine Ridge Corporation for the month of February follow:

$$\begin{array}{ c } \hspace{2pt}\textbf{Materials Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 56,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}227,000}&\ \text{{\text{\hspace{35pt}{190,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Finished Goods Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 200,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}345,000}&\ \text{{\text{\hspace{35pt}{ 251,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Manufacturing Overhead Control} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}155,000}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Work-in-Process Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}BB (2/1) 100,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{}\hspace{21pt} \text{\hspace{12pt}Labor 187,500}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{12pt}150,000{}}}}& \end{array}$$

Additional information for February follows:

• Labor wage rate was $25 per hour.
• During the month, sales revenue was$600,000, and selling and administrative costs were $105,000.
• This company has no indirect materials or supplies.
• The company applies manufacturing overhead on the basis of direct labor costs.

Required
What was the balance of the Work-in-Process Inventory account at the end of February?

Partially completed T-accounts and additional data for Pine Ridge Corporation for the month of February follow:

$$\begin{array}{ c } \hspace{2pt}\textbf{Materials Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 56,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}227,000}&\ \text{{\text{\hspace{35pt}{190,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Finished Goods Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 200,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}345,000}&\ \text{{\text{\hspace{35pt}{ 251,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Manufacturing Overhead Control} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}155,000}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Work-in-Process Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}BB (2/1) 100,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{}\hspace{21pt} \text{\hspace{12pt}Labor 187,500}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{12pt}150,000{}}}}& \end{array}$$

Additional information for February follows:

• Labor wage rate was $25 per hour.
• During the month, sales revenue was$600,000, and selling and administrative costs were $105,000.
• This company has no indirect materials or supplies.
• The company applies manufacturing overhead on the basis of direct labor costs.

Required
What was the cost of products completed during February?

Partially completed T-accounts and additional data for Pine Ridge Corporation for the month of February follow:

$$\begin{array}{ c } \hspace{2pt}\textbf{Materials Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 56,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}227,000}&\ \text{{\text{\hspace{35pt}{190,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Finished Goods Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 200,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}345,000}&\ \text{{\text{\hspace{35pt}{ 251,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Manufacturing Overhead Control} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}155,000}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Work-in-Process Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}BB (2/1) 100,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{}\hspace{21pt} \text{\hspace{12pt}Labor 187,500}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{12pt}150,000{}}}}& \end{array}$$

Additional information for February follows:

• Labor wage rate was $25 per hour.
• During the month, sales revenue was$600,000, and selling and administrative costs were $105,000.
• This company has no indirect materials or supplies.
• The company applies manufacturing overhead on the basis of direct labor costs.

Required
What was the manufacturing overhead application rate in February?

Partially completed T-accounts and additional data for Pine Ridge Corporation for the month of February follow:

$$\begin{array}{ c } \hspace{2pt}\textbf{Materials Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 56,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}227,000}&\ \text{{\text{\hspace{35pt}{190,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Finished Goods Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 200,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}345,000}&\ \text{{\text{\hspace{35pt}{ 251,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Manufacturing Overhead Control} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}155,000}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Work-in-Process Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}BB (2/1) 100,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{}\hspace{21pt} \text{\hspace{12pt}Labor 187,500}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{12pt}150,000{}}}}& \end{array}$$

Additional information for February follows:

• Labor wage rate was $25 per hour.
• During the month, sales revenue was$600,000, and selling and administrative costs were $105,000.
• This company has no indirect materials or supplies.
• The company applies manufacturing overhead on the basis of direct labor costs.

Required
What was the over- or underapplied manufacturing overhead for February?

Partially completed T-accounts and additional data for Pine Ridge Corporation for the month of February follow:

$$\begin{array}{ c } \hspace{2pt}\textbf{Materials Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 56,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}227,000}&\ \text{{\text{\hspace{35pt}{190,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Finished Goods Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{} \text{\hspace{12pt}BB (2/1) 200,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{} \text{\hspace{12pt}345,000}&\ \text{{\text{\hspace{35pt}{ 251,000}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Manufacturing Overhead Control} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}155,000}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Work-in-Process Inventory} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{12pt}BB (2/1) 100,000}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \text{}\hspace{21pt} \text{\hspace{12pt}Labor 187,500}&\ \text{{\text{\hspace{37pt}{}}}}&\\ \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{37pt}{}}}}& \end{array}$$

$$\begin{array}{ c } \hspace{2pt}\textbf{Cost of Goods Sold} \end{array}\\$$

$$\begin{array} {c|c}\hline \text{}\hspace{21pt} \text{\hspace{37pt}}&\ \text{{\text{\hspace{12pt}150,000{}}}}& \end{array}$$

Additional information for February follows:

• Labor wage rate was $25 per hour.
• During the month, sales revenue was$600,000, and selling and administrative costs were $105,000.
• This company has no indirect materials or supplies.
• The company applies manufacturing overhead on the basis of direct labor costs.

Required
What was the cost of direct materials issued to production during February?

Jennifer’s Home Remodeling worked on three jobs during March. Job 13 was in process on March 1 with total charges of $5,500. During the month, the additional transaction occurred:

Applied manufacturing overhead for March to Work in Process based on materials used in each job. The predetermined rate was based on expected materials of$80,000 and expected overhead of $120,000 for this year.

Show the journal entry to record the transaction.

Jennifer’s Home Remodeling worked on three jobs during March. Job 13 was in process on March 1 with total charges of $5,500. During the month, the additional transaction occurred:

Incurred indirect expenses totaling$13,000 including depreciation of $4,000. This also included credits of$9,000 to Accounts Payable.

Show the journal entry to record the transaction.

Jennifer’s Home Remodeling worked on three jobs during March. Job 13 was in process on March 1 with total charges of $5,500. During the month, the additional transaction occurred:

Charged labor to jobs as follows:$1,000 to Job 13, $3,000 to Job 14,$2,000 to Job 15, and $1,000 as indirect labor.

Show the journal entry to record the transaction.

Jennifer’s Home Remodeling worked on three jobs during March. Job 13 was in process on March 1 with total charges of $5,500. During the month, the additional transaction occurred:

Charged materials to jobs as follows:$1,000 to Job 13, $4,000 to Job 14,$3,000 to Job 15, and $2,000 as indirect materials.

Show the journal entry to record the transaction.

Jennifer’s Home Remodeling worked on three jobs during March. Job 13 was in process on March 1 with total charges of $5,500. During the month, the additional transaction occurred:

Purchased$10,000 worth of new materials on account.

Show the journal entry to record the transaction.