on Company is a manufacturing firm that uses job-order costing. The company\'s i
ID: 2418521 • Letter: O
Question
on Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year:
Beginning
Balance Ending
Balance
Raw materials $ 12,000 $ 15,100
Work in process $ 32,700 $ 15,000
Finished goods $ 108,000 $ 120,000
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 17,700 machine-hours and incur $265,500 in manufacturing overhead cost. The following transactions were recorded for the year:
• Raw materials were purchased, $415,000.
•
Raw materials were requisitioned for use in production, $411,900 ($386,000 direct and $25,900 indirect).
•
The following employee costs were incurred: direct labor, $340,000; indirect labor, $71,000; and administrative salaries, $153,000.
• Selling costs, $114,000.
• Factory utility costs, $25,000.
•
Depreciation for the year was $120,000 of which $114,000 is related to factory operations and $6,000 is related to selling, general, and administrative activities.
•
Manufacturing overhead was applied to jobs. The actual level of activity for the year was 14,200 machine-hours.
• Sales for the year totaled $1,291,000.
Required:
a.
Prepare a schedule of cost of goods manufactured in good form. (Do not round predetermined overhead rate. Input all amounts as positive values. Omit the "$" sign in your response.)
Schedule of Cost of Goods Manufactured
Direct materials:
(Click to select)
Ending work in process inventory
Beginning finished goods inventory
Ending raw materials inventory
Beginning raw materials inventory
Beginning work in process inventory
$
(Click to select)
Add
Deduct
:
(Click to select)
Purchases of raw materials
Finished goods inventory, beginning
Ending work in process inventory
Raw materials inventory, ending
Beginning work in process inventory
Total raw materials available
(Click to select)
Deduct
Add
:
(Click to select)
Beginning work in process inventory
Ending raw materials inventory
Ending work in process inventory
Beginning raw materials inventory
Purchases of raw materials
Raw materials used in production
(Click to select)
Add
Deduct
:
(Click to select)
Raw materials inventory, beginning
Indirect labor
Direct materials
Indirect materials included in manufacturing overhead
Direct labor
(Click to select)
Purchases of raw materials
Raw materials inventory, ending
Ending work in process inventory
Raw materials inventory, beginning
Direct labor
(Click to select)
Purchases of raw materials
Raw materials inventory, ending
Direct labor
Raw materials inventory, beginning
Manufacturing overhead cost applied to work in process
Total manufacturing cost
(Click to select)
Add
Deduct
:
(Click to select)
Purchases of raw materials
Raw materials inventory, ending
Raw materials inventory, beginning
Ending work in process inventory
Beginning work in process inventory
(Click to select)
Add
Deduct
:
(Click to select)
Raw materials inventory, ending
Purchases of raw materials
Beginning work in process inventory
Raw materials inventory, beginning
Ending work in process inventory
Cost of goods manufactured $
b.
Was the overhead underapplied or overapplied? By how much? (Do not round predetermined overhead rate. Input the amount as a positive value. Omit the "$" sign in your response.)
Manufacturing overhead
(Click to select)
underapplied
overapplied
$
c.
Prepare an income statement for the year. The company closes any underapplied or overapplied overhead to Cost of Goods Sold. (Input all amounts as positive values. Omit the "$" sign in your response.)
Income Statement
(Click to select)
Depreciation
Direct materials
Selling costs
Sales
Cost of goods sold (adjusted)
Administrative salaries
$
(Click to select)
Selling costs
Administrative salaries
Sales
Depreciation
Cost of goods sold (adjusted)
(Click to select)
Gross margin
Gross loss
Selling and administrative expenses:
(Click to select)
Rent expense
Depreciation
Insurance expense
Administrative salaries
Direct materials
Selling costs
$
(Click to select)
Rent expense
Administrative salaries
Depreciation
Insurance expense
Selling costs
Direct materials
(Click to select)
Direct materials
Insurance expense
Depreciation
Administrative salaries
Rent expense
Selling costs
(Click to select)
Net operating income
Net operating loss
$
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Explanation / Answer
Solution.
Predetermined overhead rate based on machine-hours.
Predetermined overhead rate = 265,500 / 17,700 = $15
A.
B.
Budgeted overhead = 14,200 x $15 = $213,000
Acyual overhead inccured = 508,900
Overapplied = $295,900
Direct Material Purchases 415,000.00 + Direct Material Beginning Inventory 12,000.00 Direct Material Ending Inventory (15,100.00) Cost of Direct Material Used in Production 411,900.00 Cost of Direct Material used in Production 411,900.00 + Direct Labor Cost 340,000.00 + Factory Overhead Cost 213,000.00 Manufacturing Cost 964,900.00 + Beginning Work in Process 32,700.00 Ending Work in Process (15,000.00) Cost of Goods Manufactured 982,600.00Related Questions
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