oblem 1 Part A A company had the following balances: Sales $200,000 Cost of Good
ID: 2552850 • Letter: O
Question
oblem 1 Part A A company had the following balances: Sales $200,000 Cost of Goods Manufactured $175,000 Cost of Goods Sold $130,000 Selling Expense $28,000 General and Admin Expenses $30,000 Direct Labor $60,000 . . How much was gross profit? Part B Accountants Inc. had prime costs of $6,000,000 and conversion costs of $9,000,000. If direct materials were $4,000,000 and overhead was $7,000,000, how much was direct labor? Part C Book it, Inc. uses a predetermined overhead rate of 150% of direct labor based on estimated overhead of $450,000 and estimated direct labor of $300,000. Job 199A incurred $100,000 of direct labor costs. How much overhead should be applied to this job? Part D My Company uses the weighted average method for process cost accounting. My Company had 20,000 units in Beginning Work in Process Inventory. We started 150,000 units this period. Ending Work in Process Inventory has 60,000 units. Calculate the units completed and transferred this period.Explanation / Answer
Answer Part A
Gross profit = Sales - Cost of goods sold = $200,000 - $130,000 = $70,000
Answer Part B
Prime cost = Direct Material + Direct Labour
or , Direct Labour = $6,000,000 - $4,000,000 = $2,000,000
Second Alternative ,
Conversion cost = Direct labour + Overhead costs
Direct labour = $9,000,000 - $7,000,000 = $2,000,000
Answer Part C
Overhead applied to Job 199A = Direct Labour incurred * predetermined overhead rate
= $100,000 * 150 % = $150,000
Answer Part D
Units Completed & transfer = Beginning WIP inventory + Units started - Ending WIP inventory
= 20,000 + 150,000 - 60,000 = 110,000 units
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