Question

Dobson Manufacturing Company uses a job order cost system with manufacturing overhead applied to products on the basis of direct labor dollars. At the beginning of the most recent period, the company estimated its total direct labor cost to be $51,200 and its total manufacturing overhead cost to be $81,920 Several incomplete general ledger accounts show the transactions that occurred during the most recent accounting period which is given in second requirement. Required 1. Calculate the predetermined overhead rate termined Overhead Rate 1601 % of Direct Labor Cost 2. Fill in the missing values in the T-accounts Raw Materials Inventory Work in Process Inventory 13,200 93,500 28,200 29,500 69,600 41,200 65,920 18,500 Beginning Balance 78,500 Beginning Balance Direct Materials Direct Labor Applied Overhead Ending Balance Ending Balance Finished Goods Inventory Cost of Goods Sold 40,200 187,720 49,000 Unadjusted Cost of Goods Sold Beginning Balance Cost of Goods Completed Ending Balance Adjusted Cost of Goods Sold

Answer 1

Answers

• Requirement 1 is already complete and correct
• Requirement 2

Raw material inventory
Beginning balance	$13,200	$78,500	Raw material used [13200 + 93500 - 28200]
Purchases	$93,500
Ending balance	$28,200
WIP Inventory
Beginning balance	$29,500	$187,720	Cost of Goods completed - Finished goods inventory
Direct materials	$69,600
Direct Labor	$41,200
Applied Overhead [$41200 direct labor cost x 160% Requirement 1 answer]	$65,920
Ending balance	$18,500
Finished Goods Inventory
Beginning balance	$40,200	$178,920	Cost of Goods Sold [40200 + 187720 - 49000]
Cost of Goods completed	$187,720
Ending balance	$49,000
Cost of Goods Sold
Unadjusted Cost of Goods Sold	$178,920
Adjusted Cost of Goods Sold [*See Requirement 3 for $14520 calculation]	$164,400 [178920 – 14520]
Sales Revenue
	$0	$301,000
Manufacturing Overhead
Indirect materials	$8,900	$65,920	Applied Overhead
Indirect labor	$13,500
Factory Depreciation	$12,200
Factory Rent	$6,900
Factory Utilities	$1,100
Other Factory Costs	$8,800
Actual Overhead	$51,400
Selling, General and Administrative expenses
Adm Salaries	$26,400
Office Depreciation	$19,900
Advertising	$14,300
Ending balance	$60,600

• Requirement 3

Applied Overheads	$65,920
Actual Overheads	$51,400
Manufacturing Overheads are	OVER APPLIED, because Applied overheads are MORE than actual overhead
OVER - APPLIED by	$14,520 [65920 – 51400]

• Requirement 4

Cost of Goods manufacturing & Sold Report
Beginning Raw material Inventory	$13,200
Add: Raw material purchases	$93,500
Less: Ending raw material inventory	$28,200
Less: Indirect material	$8,900
Direct Materials used in production	$69,600
Direct Labor	$41,200
Manufacturing Overhead	$65,920
Total Current Manufacturing costs	$176,720
Add: Beginning WIP Inventory	$29,500
Total WIP	$206,220
Less: Ending WIP Inventory	$18,500
Cost of Goods manufactured	$187,720
Add: Beginning finished goods inventory	$40,200
Cost of goods available for sale	$227,920
Less: Ending finished goods inventory	$49,000
Unadjusted Cost of Goods Sold	$178,920
Less: Overapplied manufacturing overhead	$14,520
Adjusted Cost of Goods Sold	$164,400

• Requirement 5

Income Statement

Sales Revenue	$301,000
Less: Cost of Goods SOld	$164,400
Gross Profits	$136,600
Operating Expenses - Selling, general and administrative expenses	$60,600
Net Income from Operations	$76,000