Question

Selected T-accounts of Moore Company are given below for the just completed year: Manufacturing Overhead 210,800 Credits Debits Bal. 1/1 Debits Bal. 12/31 Raw Materials 21,000 Credits 132,000 31,000 Work in Process 26,000 Credits 96,000 168,000 226,800 488,000 Debits Bal. 1/1 Direct materials Direct labor Overhead Bal. 12/31 Factory Wages Payable 197,000 Bal. 1/1 Credits | Bal. 12/31 12,000 192,000 7,000 Cost of Goods Sold Finished Goods 46,000 Credits 2 ? Debits Bal. 1/1 Debits Bal. 12/31 69,000 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? 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 $9,500 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

1) Raw material used = 21000+132000-31000 = 122000

2) Indirect material used = 122000-96000 = 26000

3) Indirect labor = 192000-168000 = 24000

4) Cost of goods manufactured = 488000

5) Unadjusted cost of goods sold = 46000+488000-69000 = 465000

6) Overhead rate = 226800/168000 = 135% of labor cost

7) applied overhead = 226800

Actual overhead = 210800

Over applied overhead = 16000

8) Ending work in process = 28800

Applied overhead = 9500*1.35 = 12825

Direct material = 28800-9500-12825 = 6475