Question

Lamonda Corp. uses a job order cost system. On April 1, the accounts had balances as shown in the T-accounts below:

The following transactions occurred during April:

(a) Purchased materials on account at a cost of $233,270.
(b) Requisitioned materials at a cost of $111,600, of which $15,800 was for general factory use.
(c) Recorded factory labor of $224,800, of which $42,975 was indirect.
(d) Incurred other costs:

Selling expense	$	34,100
Factory utilities		23,500
Administrative expenses		50,250
Factory rent		11,700
Factory depreciation		19,600

(e) Applied overhead at a rate equal to 139 percent of direct labor cost.
(f) Completed jobs costing $263,550.
(g) Sold jobs costing $323,270.
(h) Recorded sales revenue of $507,000.

Raw Materials Inventory : 28700, Work in Process Inventory : 19800, Finished Goods Inventory: 125000

Required:
1. & 2. Post the April transactions to the T-accounts and compute the balance in the accounts at the end of April. (Round your answers to 2 decimal places.)



3-a. Compute over- or underapplied manufacturing overhead. (Round your answer to 2 decimal places.)



3-b. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will Cost of Goods Sold increase or decrease?

	Increase
	Decrease

4. Prepare Lamonda’s cost of goods manufactured report for April. (Round your answers to 2 decimal places.)



5. Prepare Lamonda’s April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturing overhead. (Round your answers to 2 decimal places.)

Answer 1

Req 1&2.
RAW MATERIAL INVENTORY
Balance		28,700	Work in process		95,800
Accounts Payable		233,270	Manufacturing Oh		15,800
Ending Balance		150,370
MANUFACTURING OVERHEADS
Raw material inv.		15,800	Work in process		252,737
Wages payable		42,975	(181825*139%)
Cash		54,800
(23500+11700+19600)
			Balance		139,162
Work In process inventory
Balance		19,800	Finished Goods inv.		263,550
Raw material Inv.		95,800
Wages Payable		181,825
Manufacturing Overheads		252,737
Balance		286,612
Finished Goods Inventory
Balance		125,000	Cost of goods sold		323,270
Work in process inv.		263,550
Balance		65,280
Cost of Goods sold
Finished Goods inv.		323,270
Balance		323,270
Selling and Admin Overheads
Cash		84,350
(34100+50250)
Balance		84,350
Req 3-a
Manufacturing Overheads incurred				113575
(15800+42975+23500+11700+19600)
Manufacturing Overheads applied				252736.8
(181825*139%)
OVER-APPLIED Overheads				139161.8
Req 3-b:
Decrease
Req 4
Statement of Cost of Goods Manufactured:
Beginning Inventory of WIP				19800
manufacturing cost incurred:
Material direct cost			95800
Labour cost			181825
Manufacturing Oh applied			252736.8
Total manufacturing Cost incurred				530361.8
Total cost of work in process				550161.8
less: Ending inventory of WIP				286612
Cost of goods manufactured				263549.8
Req 5.
Income Statement:
Sales revenue				507000
Less: Adjusted cost of Goods sold
Unadjusted Cost of goods sold			323270
Less: Overapplied Overheads			139161.8
Adjusted Cost of goods sold				184108.2
Gross profit				322891.8
Less: Operating expenses
Selling expenses			34100
Admin expenses			50250
Total Operating expenses				84350
Net income				238541.8