Question

Beginning balance Ending balance bort Raw materials Work in process Finished goods $19,000 $32,000 $46,500 $30,351 $54,275 The company applies overhead to jobs using a predetermined overhead rate based on direct labor hours. At the beginning of the year, the company estimated that it would work 51,000 direct labor hours and incur $351,000 in manufacturing overhead cost. The following transactions were recorded for the current month: 1. Raw materials were purchased on account in the amount of $87,000. 2. Raw materials requisitioned for use in production totaled $98,000 ($86,000 direct and $12,000 indirect). 3. The following employee costs were incurred: direct labor was $77,000; indirect labor was $21,000, and executive salaries were $42,000. 4. Selling costs, consisting of commissions for a contracted sales staff and advertising, were incurred in the amount of $44,000. 5. Utility costs were incurred in the amount of $11,400, $5,900 of which was for the factory and the rest for the administrative offices. 6. Depreciation for the month was $28,000 of which $22,000 is related to factory operations and the rest is related to selling and administrative activities. 7. Manufacturing overhead was applied to jobs. The actual level of activity for this month was 2,285 direct labor hours. 8. Sales for the month on account totaled $334,000. Required: a. Identify one example of the following cost classifications for this company: 1. Direct Material 2. Direct Labor 3. Indirect Material

i need part c, f, and g to be solved. I completed the other problems

Answer 1

ANSWER C:

Estimated overhead labor hours = 51,000 hrs per year

51,000/12=4,250 hrs per month

Actual direct labor hours = 2,285 hrs this month.

over head rate = 351,000/51,000 = $6.88

over recovery of overheads = 4250 - 2285 = 1,965 x 6.88=$13,520

RAW MATERIAL CONTROL A/C

Particluars	Amount($)	Particluars	Amount($)
To Balance b/d To General ledger adjustment a/c Total	19,000 87,000	By work in progress control a/c By work in progress control a/c By balance c/d Total	86,000 12,000 8,000
	106,000		106,000

WORK IN PROGRESS CONTROL A/C

Particluars	Amount($)	Particluars	Amount($)
To Balance b/d To Raw material control a/c To Raw material control a/c To employee cost a/c To employee cost a/c To employee cost a/c Total	32,000 86,000 12,000 77,000 21,000 42,000	By Finished goods control a/c By balance c/d Total	239,649 30,351
	270,000		270,000

FINISHED GOODS CONTROL A/C

Particluars	Amount($)	Particluars	Amount($)
To Balance b/d To Work in progress control a/c Total	46,500 239,649	By cost of goods sold a/c By balance c/d Total	239,649 54,275
	286,149		286,149

MANUFACTURING OVERHEADS A/C

Particluars	Amount($)	Particluars	Amount($)
To General ledger adjustment a/c To General ledger adjustment a/c To General ledger adjustment a/c (over heads for the period) Total	5,900 22,000 15,720	By costing p & l a/c By cost of goods sold a/c Total	13,520 30,100
	43,620		43,620

COST OF GOODS SOLD A/C

Particluars	Amount($)	Particluars	Amount($)
To Finished goods control a/c To manufacturing overhead a/c Total	231,874 30,100	By cost of sales a/c Total	261,974
	261,974		261,974

COST OF SALES A/C

Particluars	Amount($)	Particluars	Amount($)
To Selling cost a/c To utility cost a/c To General ledger adjustment a/c To cost of goods sold a/c Total	44,000 5,500 6,000 261,974	By sales a/c Total	317,474
	317,474		317,474

SALES A/C

Particluars	Amount($)	Particluars	Amount($)
To cost of sales a/c To costing p&l a/c(profit from sales) Total	317,474 16,526	By General ledger adjustment a/c Total	334,000
	334,000		334,000

COSTING P&L A/C

Particluars	Amount($)	Particluars	Amount($)
To manufacturing overhead a/c To net profit Total	13,520 3,006	By sales a/c Total	16,526
	16,526		16,526

The accounts given above are the important accounts and other a/c's such as employee cost a/c, utility cost a/c and selling cost a/c can be prepared referring to the above given a/c's .

ANSWER F:

INCOME STATEMENT

PARTICULARS	AMOUNT($)
Sales Cost of goods sold Gross profit(A) Operating expenses Selling expenses Utility expenses Administrative expenses Office expenses(depreciation) Total operating expenses(B) Operating income(A-B) Net income	334,000 261,974
	72,026
	44,000 5,500 6,000 55,500
	16,526
	16,526

ANSWER G:

Product cost = direct material + direct labor + manufacturing overheads

=86,000+77,000+30,100

=$193,100

Period cost = Marketing & Selling Expenses + Administrative Expenses + Interest Expenes

=44,000+11,400+28,000

=$83,400

Prime cost = Raw Material + Direct Labor

=98,000 + 77,000 = $175,000

conversion cost = direct labor + indirect material + indirect labor + other fixed & variable ovrheads

= 77,000+12,000+21,000+30,100

=$140,100