Question

Lamonda Corp. uses a job order cost system. On April 1, the accounts had balances as shown in the T-accounts below:

The following transactions occurred during April:

(a) Purchased materials on account at a cost of $136,000.
(b) Requisitioned materials at a cost of $122,000, of which $28,000 was for general factory use.
(c) Recorded factory labor of $155,000, of which $24,000 was indirect.
(d) Incurred other costs:

Selling expense	$	44,000
Factory utilities		26,000
Administrative expenses		15,000
Factory rent		30,000
Factory depreciation		24,000

(e) Applied overhead at a rate equal to 135 percent of direct labor cost.
(f) Completed jobs costing $375,000.
(g) Sold jobs costing $402,000.
(h) Recorded sales revenue of $500,000.

Required:
1. & 2. Post the April transactions to the T-accounts and compute the balance in the accounts at the end of April.

3-a. Compute over- or underapplied manufacturing overhead.

3-b. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will Cost of Goods Sold increase or decrease?

4. Prepare Lamonda’s cost of goods manufactured report for April.

5. Prepare Lamonda’s April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturing overhead.

Answer 1

Answer:

	Raw Material Inventory			Work in process inventory
	Beg.Bal	25,000				Beg.Bal	55,000	375,000	f)
	a)	136,000	122,000	b)		b)	94,000
						c)	131,000
	end bal	39,000				e)	176850
						end bal	81,850
	Finished goods Inventory			Manufacturing overhead
	BegBal.	60,000				Beg.Bal
	f)	375,000	402,000	g)		b)	28,000	176850	e)
						c)	24,000
	End bal	33,000				d)	26,000
						d)	30,000
						d)	24,000
								44,850	end bal
	Cost of Goods sold				Sales Revenue
	BegBal.					Beg.Bal
	g)	402,000						500,000	h)
	end bal	402,000				End Bal		500,000
	Selling And Administrative expense
	Beg.Bal
	d)	44,000
	d)	15,000
	End bal	59,000
3a)	Manufacturing overhead	overapplied	44,850
3b)	Decrease
4)	Cost of goods manufactured Report
	Beginning raw materials inventory		25,000
	Add Raw materials purchases			136,000
	less indirect materials			28,000
	less ending raw materials inventory		39,000
	Direct materials used			94,000
	Direct labor				131,000
	manufacutring overhead applied		176,850
	total current manufacturing costs		401,850
	Add Beginning work in process inventory	55,000
	less ending work in process inventory		81,850
	Cost of goods manufactured			375,000
5)	Income statement
	Sales srevenue					500,000
	cost of goods sold
	Beginning finished goods inventory		60,000
	Add cost of goods manufactured		375,000
	less ending finished goods inventory		33,000
	Unadjusted Cost of goods sold			402,000
	less:overapplied manufacturing overhead	44,850	357,150
	Gross profit					142,850
	Selling and administrative expense			59,000
	Net income from operations				83,850