Question

Solve this problem with explaination

Chapter 3 - COGM Schedule Tour vase and pot company has the following balances in the accounting system related to inventory. 5/1/2018 5/31/2018 Raw Materials $ 3,000 $ 5,500 Work in Process $ 7,500 $ 4,200 Finished Goods $ 19,500 $ 14,250 Complete a Cost of Goods Manufactured Schedule and Cost of Goods Sold Schedule for the period ended 5/31/18 based on this information and the transactions on the prior page. Cost of Goods Manufactured Raw Materials WIP Cost of Goods Manufactured Cost of Goods Sold Beginning Inventory Page 98 of 185

Answer 1

	Schedule of cost of goods manufactured
				$	$	$
Direct materials:
Raw materials inventory,beginning					3000
Add: Purchase of raw materials					18000
Total raw materials available					21000
Deduct:
Raw materials inventory,ending				5500
Indirect materials				3500	9000
Raw materials used in production						12000
Direct labor	(Wages for production line personnel)					21000
Manufacturing overhead applied to work in process
(Production line wages*$ 3)			(21000*3)			63000
Total manufacturing costs incurred during the month						96000
Add: Beginning work in process inventory						7500
Total manufacturing costs						103500
Deduct: Ending work in process inventory						4200
Cost of goods manufactured						99300
		Schedule of cost of goods sold
						$
Finished goods inventory,beginning						19500
Add: Cost of goods manufactured						99300
Cost of goods available for sale						118800
Deduct: Finished goods inventory,ending						14250
Unadjusted cost of goods sold						104550
Under applied (over applied) overhead			(Note:1)			-12625
Adjusted cost of goods sold						91925
Note:1
Actual overhead:
				$
Indirect materials				3500
Production manager's wages				26000
Factory maintenance personnel wages				13000
Property taxes	(10500*75%)			7875
Total				50375
Applied overhead=$ 63000
Applied overhead > Actual overhead
Hence,overhead is over-applied
Over-applied overhead=63000-50375=$ 12625
Predetermined overhead rate=Estimated overhead/Allocation base
Allocation base is production hours,
Estimated overhead:
				$
Variable cost	(1200*6.75)			8100
Fixed cost				165000
Total				173100
Predetermined overhead rate=173100/1200=$ 144.25 per hour
Allocation base is dollar of wages,
Estimated overhead:
				$
Variable cost	(25000*4.25)			106250
Fixed cost				165000
Total				271250
Predetermined overhead rate=271250/25000=$ 10.85 per dollar of wages
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