1. The comparative balance sheet forChelsea Companyappears below:Chelsea CompanyComparative Balance.

1. The comparative balance sheet forChelsea Companyappears below:Chelsea CompanyComparative Balance.

1. The comparative balance sheet forChelsea Companyappears below:Chelsea CompanyComparative Balance SheetDec. 31, 2010 Dec. 31, 2009AssetsCash $51,000 $17,000Accounts receivable 6,000 8,000Inventory 10,000 7,000Prepaid expenses 2,000 3,000Building 30,000 15,000Accumulated depreciation—building (3,000) (2,000)Total assets $96,000 $48,000Liabilities and Stockholders’ EquityAccounts payable $ 3,000 $ 5,000Long-term note payable 12,000 13,000Common stock 38,000 18,000Retained earnings 43,000 12,000Total liabilities and stockholders’ equity $96,000 $48,000The income statement for the year is as follows:Chelsea CompanyIncome StatementFor the Year Ended December 31, 2010Sales (all on credit) $410,000Expenses and lossesCost of goods sold $252,000Operating expenses, exclusive of depreciation 94,300Depreciation expense 1,000Interest expense 1,200Loss on sale of land 2,500Income taxes 9,000Total expenses and loss 360,000Net income $ 50,000Cash dividends of $19,000 were paid during the year. Land costing $20,000 was acquired by the issuance of common stock. The property was subsequently sold for $17,500 cash. (HINT: The acquisition of the land should be disclosed in a footnote only. The loss on the sale of the land will be added back under the Operating section of the cash flow. The proceeds received will be recorded under Investing.)InstructionsPrepare a statement of cash flows for the year ended December 31, 2010 using the indirect method.2. Costly Manufacturing uses a job order cost accounting system. OnOct 1, the company has a balance in Work in Process Inventory of $6,500 and two jobs in process: Job No. 329, $4,000 and Job No. 330, $2,500. During Oct, a summary of source documents reveals the following:For Materials Requisition Slips Labor Time TicketsJob No. 329 $ 2,500 $ 8,400Job No. 330 3,600 3,400Job No. 331 4,400 3,200Job No. 332 3,000 3,000General Use 1,000 1,500$14,500 $19,500Costly Manufacturing applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 329 is completed during the month.Instructions(a) Prepare summary journal entries to record the requisition slips, time tickets, the assignment of manufacturing overhead to jobs, and the completion of Job No. 329. Show computations.(b) Answer the following questions.1. What is the balance in Work in Process Inventory atOct 31?2. If Costly Manufacturing incurred $8,000 of manufacturing overhead in addition to indirect materials and indirect labor, was overhead over- or underapplied in Oct and by how much?3. Without regard to your answer in (2) above, assume manufacturing overhead was underapplied in Oct. How would this amount be reported in the company’s monthly financial statements atOct 31?3. The Detailing Department of Jackson Manufacturing Company has the following production and manufacturing cost data for February.Production: Beginning inventory 5,000 units that are 100% complete as to materials and 30% complete as to conversion costs; units started into production 15,000; ending inventory of 4,000 units that are 30% complete as to conversion costs.Manufacturing Costs: Beginning work in process inventory of $50,000, comprised of $30,000 of materials and $20,000 of conversion costs. Materials added during the month, $94,000; labor and overhead applied during the month, $72,000 and $45,000, respectively.Instructions(a) Compute the equivalent units of production for materials and conversion costs for the month of February.(b) Compute the unit costs for materials and conversion costs.(c) Determine the costs to be assigned to the units transferred out and ending work in process.4. Julius Company developed the following standard costs for its product for 2012Standard Cost CardUnit Standard CostDirect materials (6 pounds @ $3 per pound) $18Direct labor (4 hours @ $10 per hour) 40Manufacturing overheadVariable (5 hours @ $4 per hour) 20Fixed (3 hours @ $3 per hour) 9$87The company planned to work 220,000 direct labor hours and produce 55,000 units of product in 2012.Actual results for 2012 are as follows:• 52,000 units of product were produced.• Actual direct materials purchased and used during the year amounted to 320,000 pounds at a cost of $951,600.• Actual direct labor costs were $1,800,000 for 170,000 direct labor hours worked.• Total actual manufacturing overhead incurred amounted to $1,435,000.InstructionsCalculate the following variances showing all computations supporting your answers. Indicate if the variances are favorable (F) or unfavorable (U).(a) Direct materials price and direct material quantity variances.(b) Direct labor price and direct labor quantity variances.(c) Overhead controllable and overhead volume variances.

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