Question

PROBLEM 3-11 T-Account Analysis of Cost Flows LO3-2, LO3-3, LO3-4 Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Manufacturing Overhead 230,000 Credits Credits Debits Bal. 1/1 Debits Bal. 12/31 15.000 120,000 25,000 Work in Process Factory Wages Payable Credits 470,000 Debits 185,000 Bal. 1/1 20,000 Direct materials 90,000 Direct labor 1 50,000 Overhead....240,000 Bal. 12/31 Bal. 1/1 Credits Bal. 12/31 9.000 180,000 4.000 Finished Goods Cost of Goods Sold Bal. 1/1 40,000 Credits Debits Debits Bal. 12/31 60,000 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? What was the unadjusted cost of goods sold for the year? Do not include any und overapplied overhead in your answer. 6. If overhead is applied to production on the basis of direct labor cost, what predeter rate was in effect during the year? Was manufacturing overhead underapplied or overapplied? By how much? & Compute the ending balance in Work in Process. Assume that this balance consists started during the year. If $8,000 of this balance is direct labor cost how much of cost? Applied overhead cost? predetermined overto sists entirely of Ich of it is direct mai

Answer 1

According to the requirement of the question, we have to fill the blanks of Ledger.

Requirement 1:- What was the Cost of Raw Materials used in production during the year?

Solution:- $110,000

Beginning Raw Material inventory	$15,000
Add: Purchases of materials (Debits)	$120,000
Total raw materials available	$135,000
Less: Ending raw material inventory	$(25,000)
Raw Materials used in production	$110,000

Requirement 2:- How much of the materials in (1) above consisted of indirect materials?

Solution:- Out of the $110,000 materials used for production. $90,000 was debited to Work in Process as Direct Materials.

Therefore, the difference of $20,000 ($110,000 - $90,000) was Debited to Manufacturing Overhead as Indirect Materials.

Requirement 3:- How much of the factory labor cost for the year consisted of indirect labor?

Solution:- $30,000

Total factory wages (Credits)	$180,000
Less:- Direct Labor cost (from Work in Process)	$(150,000)
Factory (Indirect) labor cost	$30,000

Requirement 4:- What was the cost of Goods Manufactured for the year?

Solution:- The Cost of Goods Manufactured was $470,000 (Credits to the Work in Process Account)

Requirement 5:- What was the Unadjusted cost of Goods Sold for the year? Do not include any under applied or over applied overhead in your answer.

Solution:- $450,000

Beginning Finished Goods inventory	$40,000
Add: Cost of Goods Manufactured (from Work in Process)	$470,000
Cost of Goods available for sale	$510,000
Less: Ending Finished goods inventory (Given)	$(60,000)
Cost of Goods Sold	$450,000

Requirement 6:- If the overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year?

Solution:- The predetermined overhead rate was:-

Predetermined Overhead Rate = Estimated Total manufacturing Overhead Cost / Estimated Total amount of the allocation

Predetermined Overhead Rate = $240,000 / $150,000 (direct labor cost)

Predetermined Overhead Rate = 160% of direct labor cost

Requirement 7:- Was manufacturing overhead under applied or over applied? By how much?

Solution:- Over Applied Overhead was $(10,000)

Actual Manufacturing Overhead Cost (Debits Manufacturing Overhead)	$230,000
Manufacturing Overhead Applied (Debits to Work in Process)	$240,000
Over Applied Overhead	$(10,000)

Requirement 8:- Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $8,000 of his balance is direct labor cost, how much of it is direct materials cost? Applied overhead Cost?

Solution:- The Ending Balance in Work in Process is $30,000 ($500,000 - $470,000). Direct Labor makes up $9,200 of this balance, and overhead applied makes up $12,800.

Ending Balance, Work in Process	$30,000
Less: Direct material Cost (given)	$(8,000)
Less: Manufacturing Overhead cost ($8,000 * 160%)	$(12,800)
Direct Labor Cost (Balance)	$9,200

Ledger Accounts

Raw Materials

Balance 1/1	$15,000	Credits	$110,000
Debits	$120,000
Balance 12/31	$25,000

Work in Process

Balance 1/1	$20,000	Credits	470,000
Direct Materials	$90,000
Direct Labor	$150,000
Overhead	$240,000
Balance 12/31	$30,000

Factory Wages Payable

Debits	$185,000	Balance 1/1	$9,000
		Credits	$180,000
		Balance 12/31	$4,000

Finished Goods

Balance 1/1	$40,000	Credits	$450,000
Debits	$470,000
Balance 12/31	$60,000

Cost of Goods Sold

Debits

$450,000

Thank you....