Problem #1-25 pts Consider the information in the additional information provide

Question

Problem #1-25 pts Consider the information in the additional information provided to bring Trish Flower Shop up to-date through January 31, 2017. Trish Flower Shop's normal-costing system has two direct-cost categories (direct material costs and direct manufacturing labor costs) and one indirect-cost pool (manufacturing overheacd costs, which are allocated using direct manufacturing labor costs). Additional information: a. The budgeted man g overhead costs are for 2017 are $700,000 and $400,000 for direct manufacturing labor costs b. The unfinished Job A as of January 31, 2017 has direct manufacturing labor costs of $4.000 125 direct manufacturing labor-hours) and direct material costs of $10,000. Direct manufacturing labor-hours used for January to 3,500 hours c. Total direct materials issued to production during January 2017 are 180,000 d. Cost of goods completed during January is $360,000 e. Materials inventory as of January 31, 2017 is $40,000. Begininng materials inventory as 1/31/16 was $35,000 inished goods inventory beginning inventory as of January 31, 2016 was $10,000 and the ending inventory as of January 31, 2017, is $40,000

Explanation / Answer

1.Materials Purchased = Materials issued to production - Opening Stock + Closing Stock

= 180,000 - 35,000 + 40,000

= $185,000

2.Cost of Goods Sold = Opening Stock + Cost of goods Completed - Closing Stock

= 10,000 + 360,000 - 40,000

= $330,000

3.Direct Manufacturing Labour Cost

Rate

Labour Cost / Hours Used = Cost per Hour rate

4000 / 125 = $32/Hour

Cost

Total Hours x Hour Rate = Cost

So, Hourly rate = $32

So Hours used = 3375

3375 * 32 = 108,000

4.Manufacturing Over head

[Cost of Goods Completed = Material Cost + Labour + Manufacturing Overheads]

360,000 = 180000 + 108000 + Overheads

Over heads = 72,000

Rate = $21.33 / hour

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