Question

Please answer the question which are CIRCLED IN RED！！ Thanks a lot

At Allen Company, manufacturing overhead is applied at the rate of 160% of direct labor hours. Overhead was estimated to be $540,000 and direct labor hours were estimated to be 360,000. Actual direct labor hours and actual direct labor costs for the year amounted to 400,000 hours and $700,000. In addition, Allen Company incurred the following actual costs during the year: • Administrative expenses, $100,000 • Depreciation expense on fixed assets, $500,000 (80% of the depreciation expense was related to manufacturing activities) *Indirect material costs, $25,000 *Indirect labor costs, $45,000 Utility expense on the manufacturing facility, $125,000 Insurance expense on the manufacturing facility, $35,000 Marketing expenses, $75,000 Sales & promotion expenses, $25,000 Allen Company had the following inventory balances at the beginning and end of the year: Finished goods Work in process Raw (direct) materials January 1 $450,000 600,000 350,000 December 31 $675,000 650,000 400,000 During the year, the company purchased $150,000 of raw materials and generated sales of $2, 500,000 5. What amount of raw materials were used during the period? 6. What is the amount of prime costs? 7. What is the predetermined manufacturing overhead rate? (8 What amount is applied to manufacturing overhead? What is the amount of Manufacturing Cocteadded for the period2

Answer 1

Answer

Answer 7 Estimate overheads Estimated direct labor hours Predetermined rate 5,40,000 360000 150% Answer 8 Amount applied to manufacturing overhead (overhead applied 150% x DLH 400000) | 6,00,000

Answer 9 & 10 Schedule of Cost of goods manufactured Direct materials: Raw materials inventory, Opening Add: Purchases of raw materials Raw materials available for use Deduct: Raw materials inventory, Closing Less: Indirect Material Raw materials used in production Direct labor Manufacturing overhead applied Total manufacturing costs Add: Work in process inventory, Opening 3,50,000 150,000 5,00,000 4,00,000 25,000 75,000 7,00,000 6,00,000 13,75,000 6,00,000 19,75,000 6,50,000 $13,25,000 Deduct: Work in process inventory, Ending Cost of goods manufactured Answer 13. Prepare a schedule of cost of goods sold. Cost of goods sold. Cost of goods sold: Finished goods inventory, Beginning Add: Cost of goods manufactured Goods available for sale Deduct: Finished goods inventory, Ending Unadjusted Cost of Goods Sold Add: under applied Overheads Adjusted Cost of Goods Sold 4,50,000 13,25,000 17,75,000 6.75,000 11,00,000 30,000 11,30,000 Answer 14 & 16 Income Statement $25,00,000 11,30,000 3,70,000 1 Sales Cost of goods sold: Gross margin Miscellaneous marketing and administrative expenses Depreciation expense Net Operating income 1 2,00,000 1,00,000 3,00,000 10,70,000 Answer 15 Total Selling, General and admin expenses

Debit Credit Answer 21 & 24 Prepare journal entries to record the transactions given above Transaction General Journal raw Material Accounts Payable (raw materials purchased) 1,50,000 1.50.000 75,000 25,000 Work in process Manufacturing Overhead Raw Material raw materials issued to production) 1,00,000 7,00,000 45,000 Work in Process Manufacturing Overhead Salaries & Wages Payable (Salaries and wages incurred) 7.45,000 1,25,000 Manufacturing Overhead Accounts Payable (Utility costs incurred) 1,25,000 35,000 Manufacturing Overhead Prepaid Insurance 35,000 2,00,000 = 100000+25000+25000 Miscellaneous marketing and administrative expenses Accounts Payable 2,00,000 4,00,000 1,00,000 Manufacturing Overhead Depreciation expense Accumulated Depreciation (Depreciation recorded) 5,00,000 6,00,000 Work in Process Manufacturing Overhead loverhead applied 150% x DLH 400000) 6,00,000 13,25,000 Finished Goods Work in process (transferred to the finished goods) 13,25,000 Accounts Receivable 25,00,000 25,00,000 (Sales for the year) 11,00,000 Cost of Goods Sold Finished Goods ((The total cost to produce the goods that were sold )) 11,00,000

Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) T-Accounts Beg Bal $ 1,00,000 Raw Materials Inventory 3,50,000 b 1,50,000 $ 4,00,000 End Balance Beg Bal $ 13,25,000 Work in Process Inventory 6,00,000 $ 75,000 $ 7,00,000 6,00,000 Balance 6,50,000 $ 6,00,000 Manufacturing Overhead 25,000 h 45,000 1,25,000 35,000 4,00,000 Balance $ (30,000) Beg Bal Finished Goods Inventory 4,50,000 13,25,000 6,75,000 11,00,000 Balance b) Computation of the cost of goods sold Cost of Goods Sold $ 11,00,000 Bal. $ 11,00,000

Under applied overhead -30,000 Allocation of under applied Overhead -30,000 Revised Cost Of goods sold 11,30,000 Cost of Goods Sold $ 11,00,000 Credit Debit 30,000 $ Cost of Goods Sold Manufacturing Overhead 30,000