Question

Conundrum Corporation manufactures furniture. Due to a fire in the administrative offices, the accounting records for November of the current year were partially destroyed. You have been able to piece together the following information from the ledger. Raw Material Inventory 40,000 Bal. 11/30 45,000 Accounts Payable 12,100 Bal. 10/31 Work-in-Process Inventory Bal. 10/31 8,000 Finished-Goods Inventory Bal. 10/31 35,000 Manufacturing Overhead 60,000 Cost of Goods Sold Wages Payable 1,600 Bal 11/30 Sales Revenue Accounts Receivable Bal. 10/31 8,000

Answer 1

Predetermined overhead rate = $720,000/48,000 ($960,000/$20) = $15 per direct labor hour

1. Sales revenue = $182,000*120% = $218400

2. November 30 balance in accounts receivable = Beginning balance+ sales - cash collections

November 30 balance in accounts receivable = $8,000+218,400-205,000 = $21400

3. Cost of raw material purchased = Ending accounts payable balance+Cash payments-Beginning accounts payable balance

Cost of raw material purchased = $1,000+81,000-12,100 = $69,900

4. November 30 balance in work in process inventory = $20,600+500*$20+500*$15

November 30 balance in work in process inventory = $20,600+10,000+7,500 = $38,100

5. Direct labor added = Ending wages payable balance+payments made-Beginning wages payable balance

Direct labor added = $1,600+79,500-1,000 = $80100

6. Applied overhead = Direct labor hours*Predetermined overhead rate

Applied overhead = ($80,100/$20) 4,005*$15 = $60,075

7. Cost of goods completed = Beginning work in process+Total manufacturing cost-Ending work in process

Total manufacturing cost = Direct material+Direct labor+Applied overhead

Total manufacturing cost = $40,000+80,100+60,075 = $180,175

Cost of goods completed = $8,000+180,175-38,100 = $150075

8. Raw material used = $40,000

9. Oct 31 balance in raw material inventory = Raw material used+ending balance-raw material purchases

Oct 31 balance in raw material inventory = $40,000+45,000-67,900 = $17100

10. Over or under applied overhead = Applied overhead - Actual overhead

Over or under applied overhead = $60,075 - 60,000 = $75 over applied

Raw material inventory
Bal.10/31	$17100
accounts payable	$69,900	$40,000	Work in process
Bal.11/30	$47000

Work in process inventory
Bal.10/31	$8,000
Direct material	$40,000	$150075	Cost of goods completed
Direct labor	$80,100
Applied overhead	$60,075
Bal.11/30	$38,100

Finished goods inventory
Bal.10/31	$35000
Work in process	$150075	$182000	Cost of goods sold
Bal.11/30	$3075

Accounts payable
		$12100	Bal.10/31
Cash	$81000	$69900	Raw material
		$1000	Bal.11/30

Cost of goods sold
Finished goods	$182000

Manufacturing overhead
Actual	$60000	$60075	work in process
Bal.11/30	$75

Wages payable
		$1000	Bal.10/31
Cash	$79500	$80100	Work in process
		$1600	Bal.11/30

Sales revenue
		$218400	Accounts receivable

Accounts receivable
Bal.10/31	$8000
Sales	$218400	$205000	Cash
Bal.11/30	$21400