Selected T-accounts of Moore Company are given below for the just completed year

Question

Selected T-accounts of Moore Company are given below for the just completed year:

Required:

5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer.

6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year?

7. Was manufacturing overhead underapplied or overapplied? By how much?

8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $10,750 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Explanation / Answer

5) Unadjusted cost of goods sold = 51000+503000-76500 = $477500

6) Predetermine overhead rate =223260*100/183000 = 122% of direct labour cost

7) Overhead applied = 223260

Actual overhead = 202260

Overapplied overhead = 21000

8) Ending work in process = 31000+101000+183000+223260-503000 = 35260

Direct labour cost = 10750

Applied Overhead = 10750*122% = 13115

Direct material = 35260-10750-13115 = 11395

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