a. Raw materials were issued from the storeroom for use in production, $181,700
ID: 2351374 • Letter: A
Question
a.
Raw materials were issued from the storeroom for use in production, $181,700 (80% direct and 20% indirect).
b.
Employee salaries and wages were accrued as follows: direct labor, $199,400; indirect labor, $83,400; and selling and administrative salaries, $88,400.
c. Utility costs were incurred in the factory, $66,100.
d. Advertising costs were incurred, $99,100.
e.
Insurance costs, $21,100 (90% related to factory operations, and 10% related to selling and administrative activities).
f.
Depreciation was recorded, $180,700 (85% related to factory assets, and 15% related to selling and administrative assets).
g. Manufacturing overhead was applied to jobs at the rate of 175% of direct labor cost.
h.
Goods that cost $701,600 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
i.
Sales for the year totaled $1,230,000. The total cost to manufacture these goods according to their job cost sheets was $718,100
PLEASE ANSWER THE FOLLOWING BASED ON THE NUMBERS ABOVE THANKS
Requirement 1:
Determine the underapplied or overapplied overhead for the year. (Omit the "$" sign in your response.)
overhead $
Requirement 2:
Prepare an income statement for the year. (Hint: No calculations are required to determine the cost ofgoods sold before any adjustment for underapplied or overapplied overhead.) (Input all amounts as positive values. Omit the "$" sign in your response.)
Almeda Products, Inc.
Income Statement
For the Year Ended March 31
$
Selling and administrative expenses:
$
$
Explanation / Answer
1.
a.
Raw Materials...................................
170,000
Accounts Payable...........................
170,000
b.
Work in Process...............................
144,000
Manufacturing Overhead...................
36,000
Raw Materials................................
180,000
c.
Work in Process...............................
200,000
Manufacturing Overhead...................
82,000
Salaries Expense..............................
90,000
Salaries and Wages Payable............
372,000
d.
Manufacturing Overhead...................
65,000
Accounts Payable...........................
65,000
e.
Advertising Expense..........................
100,000
Accounts Payable...........................
100,000
f.
Manufacturing Overhead...................
18,000
Insurance Expense...........................
2,000
Prepaid Insurance..........................
20,000
g.
Manufacturing Overhead...................
153,000
Depreciation Expense........................
27,000
Accumulated Depreciation...............
180,000
h.
Work in Process...............................
350,000
Manufacturing Overhead.................
350,000
$200,000 actual direct labor cost × 175% = $350,000 overhead applied
i.
Finished Goods.................................
700,000
Work in Process.............................
700,000
j.
Accounts Receivable.........................
1,000,000
Sales............................................
1,000,000
Cost of Goods Sold............................
720,000
Finished Goods..............................
720,000
Problem 2-20A (continued)
2.
Raw Materials
Finished Goods
Bal.
32,000
(b)
180,000
Bal.
48,000
(j)
720,000
(a)
170,000
(i)
700,000
Bal.
22,000
Bal.
28,000
Work in Process
Manufacturing Overhead
Bal.
20,000
(i)
700,000
(b)
36,000
(h)
350,000
(b)
144,000
(c)
82,000
(c)
200,000
(d)
65,000
(h)
350,000
(f)
18,000
Bal.
14,000
(g)
153,000
Bal.
4,000
Cost of Goods Sold
(j)
720,000
3. Overhead is underapplied by $4,000 for the year. The entry to close this balance to Cost of Goods Sold would be:
Cost of Goods Sold.................................
4,000
Manufacturing Overhead......................
4,000
4.
Almeda Products, Inc.
Income Statement
For the Year Ended March 31
Sales...........................................................
$1,000,000
Less cost of goods sold ($720,000 + $4,000)....
724,000
Gross margin................................................
276,000
Less selling and administrative expenses:
Salary expense...........................................
$ 90,000
Advertising expense....................................
100,000
Insurance expense......................................
2,000
Depreciation expense..................................
27,000
219,000
Net operating income.....................................
$ 57,000
1.
a.
Raw Materials...................................
170,000
Accounts Payable...........................
170,000
b.
Work in Process...............................
144,000
Manufacturing Overhead...................
36,000
Raw Materials................................
180,000
c.
Work in Process...............................
200,000
Manufacturing Overhead...................
82,000
Salaries Expense..............................
90,000
Salaries and Wages Payable............
372,000
d.
Manufacturing Overhead...................
65,000
Accounts Payable...........................
65,000
e.
Advertising Expense..........................
100,000
Accounts Payable...........................
100,000
f.
Manufacturing Overhead...................
18,000
Insurance Expense...........................
2,000
Prepaid Insurance..........................
20,000
g.
Manufacturing Overhead...................
153,000
Depreciation Expense........................
27,000
Accumulated Depreciation...............
180,000
h.
Work in Process...............................
350,000
Manufacturing Overhead.................
350,000
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