Question

Selected T-accounts of Moore Company are given below for the just completed year: Manufacturing Overhead 196,800 Credits ? Debits Bal. 1/1 Debits Bal. 12/31 Raw Materials 29,000 Credits 148,000 39,000 Work in Process 34,000 Credits 104,000 192,000 220,800 512,000 Debits Bal. 1/1 Direct materials Direct labor Overhead Bal. 12/31 Factory Wages Payable 213,000 Bal. 1/1 Credits | Bal. 12/31 16,000 208,000 11,000 Cost of Goods Sold Finished Goods 54,000 Credits ? Debits Bal. 1/1 Debits Bal. 12/31 81,000 Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of goods manufactured for the year? 5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer. 6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? 7. Was manufacturing overhead underapplied or overapplied? By how much? 8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $11,500 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

Answer to first 4 parts of the question:

1) Cost of Raw Materials (RM) used in the production = Beginning balance in RM + RM purchased - Ending balance of RM Beginning balance in RM RM purchased Ending balance of RM Cost of Raw Materials (RM) used in the production $29,000 $148,000 $39,000 $138,000 [$29000+ $148000 - $39000] 2) Indirect materials used = RM used in production - RM debited to work in process account (WIP) RM used in production RM debited to work in process account (WIP) Indirect materials used $138,000 [As calculated in Part-1] $104,000 $34,000 ($138000 - $104000] 3) Indirect labor cost = Factory labor cost recorded - Direct labor debited to work in process account (WIP) Factory labor cost recorded $208,000 (Credit entry in Factory Wages Payable account] Direct labor debited to work in process account (WIP) $192,000 Indirect labor cost $16,000 ($208000 - $192000] 4) Cost of goods manufactured = Credit entry in Work in Process account Therefore, Cost of goods manufactured for the year $512,000