Question

3 Homework o Help Save a 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: Manufacturing Overhead 181.900 Credits Debits Bal. 1/1 Debits Bal. 12/31 Raw Materials 31,000 Credits 152, eee 41,000 Work in Process 36,800 Credits 106,000 198,000 207,900 518,000 Debits Bal. 1/1 Direct materials Direct labor Overhead Bal. 12/31 Factory Wages Payable 217,000 Bal. 1/1 Credits Bal. 12/31 17,000 212,000 12,000 Cost of Goods Sold Finished Goods 56,800 Credits Debits Bal. 1/1 Debits Bal. 12/31 84 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 $12.000 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

Q.1 What was the cost of raw material used in production during the year : 1,42,000

Raw Material
Opening Balance	31000
Add : Purchase	152000
Less : Closing Balance	41000
Raw Material Consumed	142000

Q.2 How much material in Q1 above consisted of indirect material : 36,000 (142,000-10,6000)

Under work in progress, direct material issue appears as 1,06,000 so balance should be indirect material from total material cost

Q.3 How much of the factory labor cost for the year consisted of Indirect Labour : 19,000 (217,000 - 198,000)

Under work in progress, direct labor cost appears as 1,06,000 so balance should be indirect labor from total labor cost

Q.4 What was the cost of goods manufactured during the year : 29,900

Work in Progress
Opening Balance	36000
Direct Material	106000
Direct Labor	198000
Overhead	207900
Less : WIP Transferred	518000
Closing WIP	29900

Q.5 What was unadjusted cost of goods sold for the year ? Do not include any underapplied or overapplied overhead in your answer : 490,000

Finished goods
Opening Balance	56000
Transfer from WIP	518000
Less : Closing Balance	84000
Cost of goods sold	490000

Q.6 If overhead is applied to production on the basis of direct labor cost what predetermined overhead rate was in effect during the year : $ 0.91 per $1 spent on direct cost (181900/198000)

Q.7 : Was manufacturing overhead under applied or over applied how much : Over applied by 26000 (207900-181900)

Q.8 : Compute ending balance in work in progress. Assume that this balance consist entirely of goods started during the year. If $12000 of this balance is direct labor cost, how much of it is direct material cost, applied overhead cost ?

Ans : Direct Material cost will be 6,424 & applied overhead will be 11,429

	WIP cost	Basis
Direct Material	6,424	(106000/198000*12000)
Direct Labor	12,000	Given
Overhead	11,429	(207900/198000*12000)
	29,853