20-4. Analyze costs of manufacturing and determine missing amounts LO1.5 Manufac

Question

20-4. Analyze costs of manufacturing and determine missing amounts LO1.5 Manufacturing cost data for Orlando Company, which uses a job order cost system, are presented below Case ACase B Case C Direct materials used Direct labor Manufacturing overhead applied Total manufacturing costs Work in process 1/1/17 Total cost of work in process Work in process 12/31/17 Cost of goods manufactured S (a) S 83,000 63,150 50,000 42,500 145,650 140,000 (d) 213,000 15,500 (0 11,800 18,000 201,500 0) 192.300 222,000 Instructions Indicate the missing amount for each letter. Assume that in all cases manufacturing overhead is applied on the basis of direct labor cost and the rate is the same. ll ights Reserved. A Oivision of Jnn Wikx.. 4) 3 5

Explanation / Answer

Direct materials used + Direct labour + Manufacturing overhead applied = Total manufacturing costs + Work in process 1/1/17 = Total cost of work in process - Work in process 12/31/17 = Cost of goods manufactured

Manufacturing overhead applied = 85% of direct labour (42,500/50,000)

Under Case C,

Total Direct labour + Manufacturing overhead appiled = 213,000 - 63,150 = 149,850

Direct labour + 0.85 * Direct labour = 149,850

Direct labour = 149,850 / 1.85 = 81,000

Manufacturing overhead = 81,000 * 85% = 68,850

Case A Case B Case C Direct materials used 53,150 (145,650-42,500-50,000) 83,000 63,150 Direct labour 50,000 140,000 81,000 Manufacturing overhead applied 42,500 119,000 (140,000*85%) 68,850 Total manufacturing costs 145,650 342,000 (83,000+140,000+119,000) 213,000 Work in process 1/1/17 55,850 (201,500-145,650) 15,500 18,000 Total cost of work in process 201,500 357,500 (342,000+15,500) 231,000 Work in process 12/31/17 9,200 (201,500-192,300) 11,800 9,000 (231,000-222,000) Cost of goods manufactured 192,300 345,700 (357,500-11,800) 222,000

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