Question

Morrow Corporation had only one job in process during May-Job X322—and had no finished goods inventory on May 1. Job X32Z was started in April and finished during May. Data concerning that job appear below: Job X32Z S 5,700 $ Beginning balance Charged to the job during May Direct materials Direct labor Manufacturing overhead applied Units completed Units in process at the end of May Units sold during May 9,000 2.700 4,700 170 0 75 In May, overhead was overapplied by $370. The company adjusts its cost of goods sold every month for the amount of the overhead that was underapplied or overapplied. Required: 1. Using the direct method, what is the cost of goods sold for May? Cost of goods sold 2. What is the total value of the finished goods inventory at the end of May? Total cost of ending finished goods inventory 3. What is the total value of the work process inventory at the end of May? Ending work in process inventory

Answer 1

(1) -- Using the direct method, what is the cost of goods sold for May?

Answer -

	Particulars	Explanation
I.	Beginning balance	Given in question	$5700
II.	Direct materials	Given in question	$9000
III.	Direct labor	Given in question	$2700
IV.	Manufacturing overhead applied	Given in question	$4700
V.	Total	I + II + III + IV	$22100
VI.	Units completed	Given in question	170
VII.	Unit product cost	V / VI	$130
VIII.	Units sold	Given in question	75
IX	Unadjusted cost of goods sold	VII * VIII	$9750
X	Overapplied overhead	Given in question	$370
	Cost of goods sold	IX - X	$9380

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(2) -- What is the total value of the finished goods inventory at the end of May?

Answer -

	Particulars	Explanation
I.	Units completed	Given in question	170
II.	Units sold	Given in question	75
III.	Units in ending inventory	I - II	95
IV.	Unit product cost	Refer working of part - (1)	$130
	Total cost of ending finished goods inventory	III * IV	$12350

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(3) -- What is the total value of the work in process inventory at the end of May?

Answer -

Particulars	Explanation	Amount
Ending work in process inventory	There is no ending work in process inventory, so its value is zero.	0