Question

Conundrum Corporation manufactures furniture. Due to a fire in the administrative offices, the accounting records for November of the current yea were partially destroyed. You have been able to piece together the following information from the ledger. Raw-Material Inventory 40,000 1193.45,000 Accounts Payable 200 Bal. 10/31 Work-in-Process Inventory Bal. 10/318,000 Finished-Goods Inventory Bal. 10/3135,000| Manufacturing Overhead 60,000 Cost of Goods Sold Wages Payable 1,500 Bal 11/30 Sales Revenue Accounts Receivable Bal. 10/318,000 Upon examining various source documents and interviewing several employees, you were able to gather the following additional information.

Answer 1

Predetermined overhead rate = $720,000/48,000 ($960,000/$20) = $15 per direct labor hour

1. Sales revenue = $181,000*120% = $217,200

2. November 30 balance in accounts receivable = Beginning balance+ sales - cash collections

November 30 balance in accounts receivable = $8,000+217,200-205,000 = $20,200

3. Cost of raw material purchased = Ending accounts payable balance+Cash payments-Beginning accounts payable balance

Cost of raw material purchased = $1,000+81,000-12,200 = $69,800

4. November 30 balance in work in process inventory = $20,600+500*$20+500*$15

November 30 balance in work in process inventory = $20,600+10,000+7,500 = $38,100

5. Direct labor added = Ending wages payable balance+payments made-Beginning wages payable balance

Direct labor added = $1,500+79,500-1,000 = $80,000

6. Applied overhead = Direct labor hours*Predetermined overhead rate

Applied overhead = ($80,000/$20) 4,000*$15 = $60,000

7. Cost of goods completed = Beginning work in process+Total manufacturing cost-Ending work in process

Total manufacturing cost = Direct material+Direct labor+Applied overhead

Total manufacturing cost = $40,000+80,000+60,000 = $180,000

Cost of goods completed = $8,000+180,000-38,100 = $149,900

8. Raw material used = $40,000

9. Oct 31 balance in raw material inventory = Raw material used+ending balance-raw material purchases

Oct 31 balance in raw material inventory = $40,000+45,000-69,800 = $15,200

10. Over or under applied overhead = Applied overhead - Actual overhead

Over or under applied overhead = $60,000 - 60,000 = $0

Raw material inventory				Accounts payable
Bal.10/31	$15,200					$12,200	Bal.10/31
accounts payable	69,800	$40,000	Work in procss	cash	$81,000	69,800	raw material
Bal.11/30	$45,000					$1,000	Bal.11/30
Work in process inventory				Finished goods inventory
Bal.10/31	$8,000			Bal.10/31	$35,000
Direct material	40,000	$149,900	Cost of goods completed	work in process	149,900	181,000	Cost of goods sold
Direct labor	80,000
Applied overhead	60,000			Bal.11/30	3,900
Bal.11/30	38,100
Manufacturing overhead				Cost of goods sold
Actual	$60,000	$60,000	Work in process	Finished goods	$181,000
Bal,11/30	$0
Wages payable				Sales revenue
		$1,000	Bal.10/31			$217,200	Accounts receivable
Cash	$79,500	80,000	Work in process
		$1,500	Bal.11/30
Accounts receivable
Bal.10/31	$8,000
Sales	217,200	$205,000	Cash
Bal.11/30	$20,200