Question

Selected T-accounts of Moore Company are given below for the just completed year:

Raw Materials
Bal. 1/1	25,000	Credits	?
Debits	140,000
Bal. 12/31	35,000

Manufacturing Overhead
Debits	203,200	Credits	?

Work in Process
Bal. 1/1	30,000	Credits	500,000
Direct materials	100,000
Direct labor	180,000
Overhead	223,200
Bal. 12/31	?

Factory Wages Payable
Debits	205,000	Bal. 1/1	14,000
		Credits	200,000
		Bal. 12/31	9,000

Finished Goods
Bal. 1/1	50,000	Credits	?
Debits	?
Bal. 12/31	75,000

Cost of Goods Sold
Debits	?

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 $10,500 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

1	The cost of raw materials used in production -
	Beginning raw materials inventory	$25,000
	Add: Purchases of materials (debits)	$140,000
	Total raw materials available	$165,000
	Deduct: Ending raw materials inventory	$35,000
	Raw materials used in production	$130,000
2	$30,000
	Of the $130,000 in materials requisitioned for production, $100,000 was debited to
	Work in Process as direct materials. Therefore, the difference of $30,000 was
	debited to Manufacturing Overhead as indirect materials.
3
	Total factory wages accrued during the year	$200,000
	(credits to the Factory Wages Payable account)
	Less direct labor cost (from Work in Process)	$180,000
	Indirect labor cost	$20,000
4	The cost of goods manufactured was $500,000
	(the credits to the Work in Process account)