Question

Prepare the company’s schedule of cost of goods sold for 20x1. The company closes overapplied or underapplied overhead into Cost of Goods Sold.

The following data refer to Twisto Pretzel Company for the year 20x1 Work-in-process inventory, 12/31/x0 Selling and administrative salaries Insurance on factory and equipment Work-in-process inventory, 12/31/x1 Finished-goods inventory, 12/31/x0 Cash balance, 12/31/xl Indirect material used Depreciation on factory equipment Raw-material inventory, 12/31/x0 Property taxes on factory Finished-goods inventory, 12/31/xl Purchases of raw material in 20x1 Utilities for factory Utilities for sales and administrative offices Other selling and administrative expenses Indirect-labor cost incurred Depreciation on factory building Depreciation on cars used by sales personnel Direct-labor cost incurred Raw-material inventory, 12/31/x1 Accounts receivable, 12/31/xl Rental for warehouse space to store raw material Rental of space for company president's office Applied manufacturing overhead Sales revenue Income tax expense $ 8,000 13,800 3,600 8,300 14,000 8,000 4,600 2,100 10,100 2,400 15,300 39,000 6,000 2,300 4,000 29,000 3,600 1,200 79,000 11,000 4,000 2,900 1,600 58,000 205,800 5,100

Answer 1

Solution:

Twisto Pretzel
Schedule of cost of goods sold
For the year 20X1
Particulars		Amount
Direct material consumed:
Raw material inventory, 12/31/X0	$10,100.00
Add: Purchases	$39,000.00
Less: Raw material inventory, 12/31/X1	$11,000.00
Raw material consumed	$38,100.00
Less: Indirect material	$4,600.00
Direct material used		$33,500.00
Direct labor		$79,000.00
Manufacturing overhead applied		$58,000.00
Total manufacturing cost incurred during the year		$170,500.00
Add: Beginning WIP		$8,000.00
Total cost of Work in Process		$178,500.00
Less: Ending WIP		$8,300.00
Cost of goods manufactured		$170,200.00
Add: Beginning finished goods inventory		$14,000.00
Cost of goods available for sale		$184,200.00
Less: Ending finished goods inventory		$15,300.00
Unadjusted cost of goods sold		$168,900.00
Less: Overapplied overhead		$6,700.00
Adjusted cost of goods sold		$162,200.00

Computation of Underapplied / Overapplied overhead
Particulars	Amount
Manufacturing overhead incurred:
Indirect material	$4,600.00
Depreciation on factory equipment	$2,100.00
Insurance on factory and equipment	$3,600.00
Property taxes on factory	$2,400.00
Utilities for factory	$6,000.00
Indirect labor cost	$29,000.00
Depreciation on factory building	$3,600.00
Total manufacturing overhead incurred	$51,300.00
Applied overhead	$58,000.00
Overapplied overhead	$6,700.00