Question

All one problem, thank you.

Selected T-accounts of Moore Company are given below for the just completed year: Bal. 1/1 Debits Bal. 12/31 Debits Manufacturing Overhead 188, 480 Credits Raw Materials 35,000 Credits 160,000 45,000 Work in Process 40,000 Credits 110,000 210,000 218,400 530,000 Debits Bal. 1/1 Direct materials Direct labor Overhead Bal. 12/31 Factory Wages Payable 225,000 Bal. 1/1 Credits Bal. 12/31 19,000 220,000 14,000 Cost of Goods Sold Debits Bal. 1/1 Debits Bal. 12/31 Finished Goods 60,000 Credits ? 90,000 Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of goods manufactured for the year? 5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer. 6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? 7. Was manufacturing overhead underapplied or overapplied? By how much? 8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $13.950 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

1. Cost of raw materials = Beginning raw materials+ Purchases - Ending raw materials

=$35,000+$160,000-$45,000

=$150,000

2. Indirect materials = Cost of raw materials- Direct materials

=$150,000-$110,000

=$40,000

3. Indirect labor = Factory Labor cost - Direct labor

=$220,000-$210,000

=$10,000

4. Cost of goods manufactured = $530,000

5. Unadjusted cost of goods sold = Beginning Finished goods+ Cost of goods manufactured- Ending finished goods

=$60,000+$530,000-$90,000

=$500,000

6. Predetermined overhead rate =$218,400/$210,000 =104%

7. Manufacturing overhead =$30,000 overapplied ($218,400-$188,400)

8. Ending work in process = Beginning Work-in-process - Direct materials+ Direct labor+ Overhead - Cost of goods manufactured

=$40,000+$110,000+$210,000+$218,400-$530,000

=$48,400

Overhead applied =$13,950×104%

=$14,508

Direct materials cost = Ending WIP - Direct labor- overhead applied

=$48,400-$13,950-$14,508

=$19,942