Question

Problem 3-11 (Algo) T-Account Analysis of Cost Flows [LO3-2, LO3-3, LO3-4) Selected T-accounts of Moore Company are given below for the just completed year: Manufacturing Overhead 202, 260 Credits Debits Bal. 1/1 Debits Bal. 12/31 Raw Materials 26,000 Credits 142,000 36,000 Work in in Process 31,000 Credits 101,000 183,000 223, 260 503,000 Debits Bal. 1/1 Direct materials Direct labor Overhead Bal. 12/31 Factory Wages Payable 207,000 Bal. 1/1 Credits Bal. 12/31 14,500 202, 000 9,500 Finished Goods 51,000 Credits Cost of Goods Sold ? Debits Bal. 1/1 Debits Bal. 12/31 76,500 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 $10,750 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

1) Cost of raw material used

= Beginning +purchased-ending

= 26000 + 142000 - 36000

= $132000

2) Indirect material

= total material -indirect material

= 132000 - 101000

= $ 31000..

3) Indirect labor

= Current factory cost-direct labor

= 202000 - 183000

= $ 19000

4) Cost of goods manufactured : $503000 (credited in work in process)

5) Unadjusted Cost of goods sold

= Beginning FG+cost of good manufactured-ending FG

= 51000 + 503000 - 76500

= $ 477500

6) Overhead rate

= Overhead /direct labor cost

= 223260 / 183000

=1.22 or 122% of direct labor cost

7) Manufacturing overhead is overapplied as actual overhead is less than applied : 223260 - 202260 = 21000

8) Ending WIP : 31000 + 101000 + 183000 + 223260 - 503000 = 35260

Applied overhead : 10750*122% = $ 13115

Direct material

= Balance - labor - overhead

= 35260 - 10750 - 13115

= $ 11395