Question

The following T-accounts represent November activity. Materials Inventory EB (11/30) 55,700 9 oints Work-In-Process Inventory BB (11/1) 33,300 Dir.Materials 85,500 Cost of Goods Sold Finished Goods Inventory EB (11/30) 99,000 Manufacturing Overhead Control eBook Applied Manufacturing Overhead 258,000 Sales Revenue 721,800 Wages Payable Print Additional Data References • Materials of $113,700 were purchased during the month, and the balance in the Materials Inventory account increased by $11,800. • Overhead is applied at the rate of 150 percent of direct labor cost. • Sales are billed at 180 percent of cost of goods sold before the over- or underapplied overhead is prorated. • The balance in the Finished Goods Inventory account decreased by $28,200 during the month before any proration of under- or overapplied overhead. • Total credits to the Wages Payable account amounted to $205,000 for direct and indirect labor. • Factory depreciation totaled $31,920. • Overhead was underapplied by $25,020. Overhead other than indirect labor, indirect materials, and depreciation was $201,700, which required payment in cash. Underapplied overhead is to be allocated. • The company has decided to allocate 25 percent of underapplied overhead to Work-in-Process Inventory, 15 percent to Finished Goods Inventory, and the balance to Cost of Goods Sold. Balances shown in T-accounts are before any allocation.

Answer 1

Materials Inventory Dr Cr Particulars Beginning Balance (11/1) (55700-11800) Accounts Payable in $ Particulars 43,900 Work-in-progress Inventory in $ 85,500 Manufacturing OH (Bal.fig.) 16,400 1,13,700 Ending Balance (11/30) 55,700 Total 1,57,600 Total 1,57,600 Work-in-Process Inventory Dr Cr Particulars Beginning Balance (11/1) Materials Inventory Wages Payable Applied Manufacturing OH in $ Particulars 33,300 Finished goods inventory in $ 2,85,986 85,500 1,72,000 2,58,000 (172000*1.50) Ending Balance (11/30) 2,62,814 Total 5,48,800 Total 5,48,800 Ending Balance (11/30) Applied Manufacturing OH 2,62,814 6,255 Ending Balance (11/30) 2,69,069 2,69,069 2,69,069 Finished goods Inventory in $ Particulars 70,800 Cost of goods sold Dr Cr Particulars in $ Beginning Balance (11/1) 2,57,786 (99000-28200) Work-in-progress inventory (Bal.fig.) 2,85,986 Ending Balance (11/30) 99,000 Total 3,56,786 Total 3,56,786 Ending Balance (11/30) Applied Manufacturing OH 99,000 3,753 Ending Balance (11/30) 1,02,753 1,02,753 1,02,753

Cost of goods sold Cr in $ Particulars 2,57,786 Costing Profit and Loss Particulars in $ Finished goods inventory (721800/280%) Applied Manufacturing OH Total 2,72,798 15,012 2,72,798 Total 2,72,798 Manufacturing OH Control Dr Cr in $ Particulars 16,400 Applied Manufacturing OH 33,000 (172000*1.50) Particulars in $ Materials Inventory 2,58,000 Factory Labor Factory Depreciation 31,920 2,01,700 Applied Manufacturing OH (Under-Applied) Other Factory OH 25,020 Total 2,83,020 Total 2,83,020 Applied Manufacturing OH Dr Cr in $ Particulars 2,58,000 Work-in-Process inventory 25,020 Work-in-Process inventory (25020*25%) Finished Goods inventory (25020*15%) Cost of Goods sold (25020*60%) in $ Particulars Manufacturing OH Manufacturing OH (under-applied) 2,58,000 6,255 3,753 15,012 Total 2,83,020 Total 2,83,020 Dr Wages Payable Cr Particulars in $ Particulars in $ Work-in-Process Inventory 1,72,000 Manufacturing OH Control 33,000 2,05,000 (205000-172000) 2,05,000 Total Balance (11/30) Total 2,05,000 Sales Revenue Dr Cr in $ Particulars 7,21,800 Accounts Receivable 7,21,800 Total in $ Particulars Costing Profit and Loss 7,21,800 Total 7,21,800

Sales 7,21,800 $ Cost of goods sold 2,57,786 (721800/280%) Let Direct Labor cost be X Manufacturing OH control incurred Materials Inventory 16400 Factory Labor 205000-X Factory Depreciation 31920 Other Factory OH 201700 Total 455020-X ) Under Applied -25020 Applied Manufacturing OH 430000-X Applied Manufacturing OH 1.50X Hence, 1.50X 430000-X 2.50X 430000 X 172000