Question

Example 5 The BCE Company allocated manufacturing overhead using predetermined overhead rate of 150% of direct manufacturing labour. The records show the following for the period: Direct Materials Used $35,000 $60,000 $94,000 Work-in-process control - ending inventory = $ 5,000 Finished Goods control - ending inventory = $15,000 - Direct Manufacturing Labour Manufacturing Overhead Control There were no beginning inventories of work-in-process or finished goods. The cost of goods sold for the period woud be:

Answer 1

Ans.	Schedule of Cost of goods manufactured & Cost of goods sold
	Particulars	Amount
	Direct materials used	$35,000
	Direct labor	60000
	Manufacturing overhead applied	$90,000
	Total manufacturing costs	$185,000
	Add: Beginning Work in process inventory	$0
	Less: Ending Work in process inventory	-$5,000
	Cost of goods manufactured	$180,000
	Add: Beginning finished goods inventory	$0
	Cost of goods available for sale	$180,000
	Less: Ending finished goods inventory	-$15,000
	Un adjusted Cost of goods sold	$165,000
	Add: under applied overhead	$4,000
	Adjusted cost of goods sold	$169,000
	Manufacturing overhead applied = Direct labor * 150%
	$60,000 * 150%
	$90,000
	*Under applied overhead = Actual overhead - Applied overhead
	$94,000 - $90,000
	$4,000
	*In the calculation of adjusted cost of goods sold Under applied overhead is added
	and over applied overhead is subtracted from the un adjusted cost of goods sold.
	*No beginning work in process and finished goods inventory are given, so they
	are considered zero.