Question

All one problem, multiple parts. Thank you!

Selected T-accounts of Moore Company are given below for the just completed year: Debits Bal. 1/1 Debits Bal. 12/31 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

Answer 1:

Beginning raw material inventory	35000
Add: Purchase of raw materials (debits)	160000
Total raw materials available	195000
Less: Ending raw materials inventory	45000
Raw materials used in production	150000

Answer 2:

Raw materials used in production	150000
Less:Direct material	110000
Indirect material	40000

Answer 3:

Factory wages payable account (credits)	220000
Less: Direct labor cost (from work in process)	210000
Indirect labor cost	10000

Answer 4:

Cost of goods manufactured (Credits to the work in process account)

530000

Answer 5:

Beginning finished goods inventory	60000
Add: Cost of goods manufactured	530000
Cost of goods available for sale	590000
Less: Ending finished goods inventory	90000
Cost of goods sold	500000

Answer 6:

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total amount of allocation bases

   = 218400 / 210000 (direct labor cost) = 104% of direct labor cost

Answer 7:

Applied overhead	218400
Less: Actual overhead	188400
Over applied overhead	30000

Answer 8:

Ending Work in process (balance) = 48400

Note :(40000 + 110000 + 210000 + 218400 - 530000) = 48400

Applied overhead cost(8) = 13950 * 1.04 = 14508

Direct material cost = 48400 - 13950 - 14508 = 19942

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