Question

Conundrum Corporation manufactures furniture. Due to a fire in the administrative offices, the accounting records for November of the current year were partially destroyed. You have been able to piece together the following information from the ledger. Raw-Material Inventory 40,000 Bal. 11/30 45,000 Accounts Payable 12,200 Bal. 10/31 Work-in-Process Inventory Bal. 10/31 8,000 Finished-Goods Inventory Bal. 10/31 35,000 Manufacturing Overhead 60,000 Cost of Goods Sold Wages Payable 1,600 Bal 11/30 Sales Revenue Accounts Receivable Bal. 10/31 8,000

1.Required A -

2.Required B -

Answer 1

a.

1	Sales revenue for September = 120% x $181000 = $217200
2	November 30 balance in accounts receivable = $8000 + 217200 - 205200 = $20000
3	Cost of raw material purchased during November = $1000 + 81000 - 12200 = $69800
4	November 30 balance in work-in-process inventory = $20600 + (500 x $20) + (500 x $15) = $20600 + 10000 + 7500 = $38100
5	Direct labor added to work in process during November = $79500 + 1600 - 1000 = $80100
6	Applied overhead for September = 4005 x $15 = $60075
7	Cost of goods completed during November = $181000 + 4075 - 35000 = $150075
8	Raw material used during November = $40000
9	October 31 balance in raw material inventory = $40000 + 45000 - 69800 = $15200
10	Overapplied or underapplied overhead for November = $60000 - 60075 = $75 overapplied

Working:

Budgeted direct labor hours = Budgeted direct labor cost/Direct labor rate = $960000/$20 = 48000

Predetermined overhead rate = Budgeted overhead/Budgeted direct labor hours = $720000/48000 = $15 per direct labor hour

Actual direct labor hours during November = $80100/$20 = 4005

.

Raw Material Inventory					Accounts Payable
Bal. 10/31	15200						12200	Bal. 10/31
	69800	40000				81000	69800
Bal. 11/30	45000						1000	Bal. 11/30
Work-in-Process Inventory					Finished Goods Inventory
Bal. 10/31	8000				Bal. 10/31	35000
Direct material	40000					150075	181000	g.
Direct labor	80100
Overhead	60075
		150075
Bal. 11/30	38100				Bal. 11/30	4075
Manufacturing Overhead					Cost of Goods Sold
j.	60000	60075			g.	181000
Wages Payable					Sales Revenue
		1000	Bal. 10/31				217200	b.
i.	79500	80100	5
		1600	Bal. 11/30
Accounts Receivable
Bal. 10/31	8000
b.	217200	205200	a.
Bal. 11/30	20000