Question

Analyzing Manufacturing Cost Accounts

Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May:

Materials
May 1	Balance	36,900	May 31	Requisitions	(a)
31	Purchases	148,400

Work in Process
May 1	Balance	(b)	31	Completed jobs	(f)
31	Materials	(c)
31	Direct labor	(d)
31	Factory overhead applied	(e)

Finished Goods
May 1	Balance	0	May 31	Cost of goods sold	(g)
31	Completed jobs	(f)

Wages Payable
			May 31	Wages incurred	120,000

Factory Overhead
May 1	Balance	22,300	May 31	Factory overhead applied	(e)
31	Indirect labor	(h)
31	Indirect materials	19,700
31	Other overhead	61,200

In addition, the following information is available:

1. Materials and direct labor were applied to the following jobs in May:
   

   Job No.		Style	Quantity		Direct Materials				Direct Labor
   101		AF1	200			$24,800				$15,000
   102		AF3	420			42,040				27,000
   103		AF2	170			12,630				7,000
   104		VY1	260			41,340				26,000
   105		VY2	190			27,780				17,000
   106		AF4	120			9,280				4,000
   		Total	1,360			$157,870				$96,000

2. Factory overhead is applied to each job at a rate of 130% of direct labor cost.
3. The May 1 Work in Process balance consisted of two jobs, as follows:
   

   Job No.	Style	Work in Process, May 1
   101	AF1	$5,900
   102	AF3	16,400
   Total		$22,300

4. Customer jobs completed and units sold in May were as follows:
   

   Job No.	Style	Completed in May	Units Sold in May
   101	AF1	X	160
   102	AF3	X	336
   103	AF2		0
   104	VY1	X	218
   105	VY2	X	158
   106	AF4		0

Required:

1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers.

Job No.	Quantity	May 1 Work in Process		Direct Materials		Direct Labor		Factory Overhead		Total Cost		Unit Cost		Units Sold	Cost of Goods Sold
No. 101		$ 5,900		$ 24,800		$ 15,000		$		$		$				$
No. 102		16,400		42,040		27,000
No. 103				12,630		7,000
No. 104				41,340		26,000
No. 105				27,780		17,000
No. 106				9,280		4,000
Total		$22,300		$157,870		$96,000		$		$						$

a. Materials Requisitions $

b. Work in Process Beginning Balance $

c. Direct Materials $

d. Direct Labor $

e. Factory overhead applied $

f. Completed jobs $

g. Cost of goods sold $

h. Indirect labor $

2. Determine the May 31 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances.

Materials	$
Work in Process	$
Finished Goods	$
Factory Overhead	$

Answer 1

1
a.	Material requisitions=Total direct materials+Indirect materials=157870+19700=$ 177570
b.	Work in process beginning balance=Cost of Job 101 and 102 as on May 1=5900+16400=$ 22300
c.	Direct materials=Total direct materials cost=$ 157870
d.	Direct labor=$ 96000
e.	Factory overhead applied=Direct labor*130%=96000*130%=$ 124800
f.	Completed job=Cost of completed jobs
	Job No.				101	102	104	105	Total
	Beginning balance				5900	16400
	Direct materials				24800	42040	41340	27780
	Direct labor			a	15000	27000	26000	17000
	Factory overhead applied			(a*130%)	19500	35100	33800	22100
	Total				65200	120540	101140	66880	353760
	Completed job=$ 331460
g.	Cost of goods sold
	Job No.				101	102	104	105	Total
	Total cost			a	65200	120540	101140	66880
	Quantity produced			b	200	420	260	190
	Cost per unit			c=a/b	326	287	389	352
	Units sold			d	160	336	218	158
	Cost of goods sold			e=c*d	52160	96432	84802	55616	289010
	Cost of goods sold=$ 289010
h.	Indirect labor=Wages incurred-Direct labor=120000-96000=$ 24000
	Job No.	Quantity	May 1 work in process	Direct materials	Direct labor	Factory overhead	Total cost	Unit cost	Units sold	Cost of goods sold
		a	b	c	d	e=d*130%	f=b+c+d+e	g=f/a	h	i=g*h
	No. 101	200	5900	24800	15000	19500	65200	326	160	52160
	No. 102	420	16400	42040	27000	35100	120540	287	336	96432
	No. 103	170		12630	7000	9100	28730	169	0	0
	No. 104	260		41340	26000	33800	101140	389	218	84802
	No. 105	190		27780	17000	22100	66880	352	158	55616
	No. 106	120		9280	4000	5200	18480	154	0	0
	Total		22300	157870	96000	124800	400970			289010
2	May 31 balances
	Materials:
					$	$
	Beginning balance					36900
	Purchases					148400
						185300
	Less:
	Direct materials				157870
	Indirect materials				19700	177570
	May 31 balance					7730
	Work in process:
						$
	Beginning balance					22300
	Add:
	Direct materials					157870
	Direct labor					96000
	Factory overhead applied					124800
						400970
	Less: cost of completed job					331460
	May 31 balance					69510