Question

a

X Company, a manufacturer, incurred the following total costs during the year: Direct materials Direct labor Overhead $53,608 113,177 155,888 The following additional information was available: • Revenue for the year was $85,034. Direct material purchases during the year were $30,062. • Several jobs that cost a total of $18,145 were unfinished as of the end of the year. • Several jobs that cost a total of $25,925 were finished during the year but not sold. • There were no unfinished or finished jobs at the beginning of the year. What was Cost of Goods Sold for the year? Submit Answer Tries 0/3

b

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10 parts

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Answer 1

a.	Cost of goods sold:
					$
	Direct materials				53608
	Direct labor				113177
	Overhead				155888
	Total manufacturing cost				322673
	Add:Beginning WIP				0
	Total manufacturing cost to account for				322673
	Less: Ending WIP				18145
	Cost of goods manufactured				304528
	Add:Beginning finished goods				0
					304528
	Less: Ending finished goods				25925
	Cost of goods sold				278603
b.	Overhead rate=Estimated factory overhead/Estimated direct labor hours
	Estimated factory overhead:
				$
	Factory supplies			21000
	Factory supervision			20900
	Factory rent			41000
	Factory insurance			65800
	Total			148700
c.	Overhead allocated to product X=Overhead allocation rate*Actual direct labor hours
	Overhead allocation rate=Estimated overhead for both departments/Estimated direct labor hours for both departments=(4600000+2100000)/(40000+40000)=6700000/80000=$ 83.75 per direct labor hour
	Overhead allocated to product X=83.75*(754+208)=83.75*962=$ 80567.5
d.	Activity rate=Budgeted costs/Total cost drivers
		Budgeted costs	Total cost drivers	Activity rate
		a	b	a/b
	Cost pool 1	114000	146500	0.78
			(80300+66200)
	Cost pool 2	50000	107500	0.47
			(58000+49500)
	Cost pool 3	33000	116900	0.28
			(65200+51700)
	Overhead allocated=Cost driver for the product*Activity rate
		Cost driver for A	Activity rate	Overhead allocated
		a	b	a*b
	Cost pool 1	80300	0.78	62634
	Cost pool 2	58000	0.47	27260
	Cost pool 3	65200	0.28	18256
	Total			108150