Question

Chapter 5 Product Costing: Job and Process Operations 193 July 1 July 31 Inventories Raw materials. ... Manufacturing supplios Office supplies.. Work in process..... Finished goods........... $18,000 2,500 1,600 52,000 36.000 $27.000 4.000 2.000 41.000 28.100 Required Prepare a statement of cost of goods manufactural and an income statement. Actual overhead costs are assigned to products. Cost of Goods Manufactured and Income Statement with Predetermined Overhead and Labor Cost Classifications Assume information pertaining to Performance Sports Group Ltd. for April 2017 follows. P5-34. LO2, 4 Performance Sports Group Ltd. (PSG) $250,000 Sales... Purchases Raw materials ...... Manufacturing supplies ....... Ollice supplies ... Salaries (including fringe benefits) Administrative........ Production supervisors.... . 40,000 800 500 6,000 3,600 15,000 Sales..... Depreciation Plant and machinery..... Office and office equipment. Utilities 8,000 4,000 Plant. Office ...... 5,250 890 Inventories Raw materials. ...... Manufacturing supplies ....... Office supplies......... Work-in-process...... ... Finished goods.......... April 1 $8,000 2,000 1,900 4,000 9,000 April 30 $9,000 2,300 1,600 4,500 10,200 Additional information follows: • Manufacturing overhead is applicd to products at 85 percent of direct labor dollars. • Employer base wages are $12 per hour. • Employee fringe bencfits amount to 40 percent of the base wage rate. They are classified as manufacturing overhead. • During April, production employees worked 5,600 hours, including 1,800 regular hours and 200 avertime hours spent working on products. There were 600 indirect labor hour . Employers are paid a 50 percent overtime premium. Any overtime premium is treated as manufacturing overhead. Required 4. Prepare a statement of cost of goxxls manufactured and an income statement for April. h. Delcrmine underapplied or overapplied overhead for April 6. Recompule direct labor and actual manufacturing overhead assuming employee fringe benefits for direct labor hours are classified as direct labor.

Answer 1

P5-34)

a) Cost of goods manufactured:
	Amount $	Amount $	Amount $
Op WIP			4000
Raw Mat.:
Op Bal.	8000
add:Purchase	40000
Total available	48000
less:Cl. Bal.	9000
RM used		39000
Direct Lab.		60000		(5000*12)
Manuf. Overhead		51000		(60000*85%)
Total Manufacturing cost			150000
Total WIP			154000
Less: Cl. WIP			4500
Cost of Goods Manufactured			149500
Income Statement for april:
Sales		250000
Less: COGS:
FG Op.	9000
add: COGM	149500
Total available for sale	158500
less:FG Cl.	10200
COGS		148300
Gross Profit		101700
Less:Admin & Selling exp.:
Office supplies	800		(1900+500-1600)
Admin salaries	6000
Sales salaries	15000
Office equipment dep.	4000
Utilities	890
Total Admin & Selling exp.		26690
Net Operating Income		75010
b) Actual overhead:
	Amount $
Manuf supplies	500		(2000+800-2300)
Prod. Supervisors	3600
Depre	8000
Utilities	5250
Fringe benefits	26880		(5600*12*40%)
Ind Lab.	7200		(600*12)
Overtime premium	1200		(200*12*50%)
Actual Overhead incurred	52630
Under applied Manuf. Overhead=Actual overhead - Applied overhead =
52630 - 51000 = 1630
c) Direct labor = 60000 + (5000*12*40%)=84000
Actual manufacturing overhead = 52630 -(5000*12*40%) = 28630