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Chapter 3 Formula Supplement

Please note:

X = times (multiply)

Ex. 3-28

Job-Cost Sheet

Total Direct Material Cost = Total Qty. x Unit Price

Total Direct Labor Cost = Hours x Rate

Manufacturing Overhead = Quantity x Application Rate

Cost Summary

Total Cost = Total D.M. Cost + Total D.L. Cost + M.O

Unit Cost = Total Cost

# of units completed

Shipping Summary

# Units Completed - Units Remaining in Inventory = Units Shipped

Cost Balance = Units Remaining in Inventory X Unit Cost


Ex 3-29


Applied manufacturing overhead = total manufacturing costs X application rate (30% here, this number is given—bullet 3)

Applied manufacturing overhead = direct-labor cost X Application rate (here 80%)

In this problem you are trying to solve for the direct-labor cost (therefore, it is the unknown). You know the applied manufacturing overhead from the first formula. Thus, you need to divide both sides by the application rate to isolate the direct-labor cost

Thus, you get the following formula:

Direct-labor cost = Applied manufacturing overhead    /    80%


Direct-material cost = total manufacturing cost - D.L. cost - applied M.O.



Total man. cost + Work-in-process - work-in-process = Cost of Goods man.

end beginning

Ex. 3-36:

Predetermined overhead rate =         budgeted overhead

                                                        budgeted production volume


This fomula means budgeted overhead divided by budgeted prod. vol.

The following formula works on this problem because this firm has a single product, overhead is applied on the basis of output units, chickens raised and sold.

budgeted overhead = budgeted fixed costs + (budgeted variable costs X volume-based cost driver)

Prob. 3-43


Cost of Goods Manufactured and Cost of Goods Sold


Direct Material:

    Beginning Materials Inventory [date]         $_______.__

    Add: Purchases                                               _______.__

           Subtotal — Materials available              _______.__

Less: Ending Material Inventory                         _______.__

                Cost of Materials Used                                                 $ ______.__


Direct Labor:

   _____D.L. Hours X $ ______ each                                               ______.__

Overhead (Allocated on D.L. hours)

    _____D.L. Hours X $ ______ each                                               ______.__

        Total Current Manufacturing Costs                                             ______.__

Add: Beginning Work-in-Process Inventory [date]                           ______.__

        Total Manufacturing Costs                                                          ______.__

Less: Ending Work-in-Process Inventory [date]                            (______.__)

          Cost of Goods Manufactured                                           $ ______.__

Add: Beginning Finished Goods Inventory [date]                             ______.__

    Total Goods Available for Sale (CGM and Beg. FG Inv.)            ______.__


Less: Ending Finished Goods [date]                                              (______.__)

            Cost of Goods Sold                                                           $ ______.__

Copright 2000, Phillip W. Gillet, Jr.   All rights reserved.