Quinto Inc., which operates a normal costing system, provides the following data for its most recent...
Quinto Inc., which operates a normal costing system, provides the following data for its most recent year of operations.
• Opening WIP (which had just one job) was valued at $2,100 for materials and $4,000 for labor.
• Costs added to WIP included $45,000 for materials and $70,000 for labor.
• The cost of goods manufactured was $195,000.
• Opening FG inventory was valued at $12,500.
• Ending FG inventory was valued at $14,420.
• Actual overhead was $97,500
• Manufacturing overhead is applied at 125% of labor cost. Any under / over applied overhead is prorated to the relevant accounts.
Determine the following. (Round computations to four decimal places).
| Value of opening WIP (before proration) | Amount of under / over applied overhead | ||
| Value of ending WIP (before proration) | Overhead is under / over applied (circle your choice) | Under applied / Over applied | |
| Unadjusted COGS (before proration) | Adjusted COGS (after proration) |
Homework Answers
| Particulars | Amount |
| WIP Inventory, beginning balance | 6100.00 |
| Add: | |
| Raw or Direct Materials used 45000.00 | |
| Direct Labor employed/used 70000.00 | |
| Actual Overhead 97500.00 | |
| Manufacturing overhead [(125%of labour Cost) 70000*125%] 87500.00 | |
| Total Manufacturing Costs Incurred | 300000.00 |
| Less: WIP Inventory, ending balance | 13600.00 |
| WIP Used | 286400.00 |
Calculation of Ending WIP= WIP + DM + DL + MOH – Cost of goods manufactured
6100+45000+70000+87500-195000= 13600
| Particulars | Amount |
| Finished Goods Inventory Beginning balance | 12500.00 |
| Add: Cost of goods manufactured | 195000.00 |
| (D) Total Cost of Goods Available for Sale | 207500.00 |
| Deduct: Finished Goods Inventory, ending balance | 14420.00 |
| (E) Cost of Goods Sold (COGS) | 193080.00 |
COGS=Beginning Inventory+P−Ending InventorywhereP=Purchases during the period
Raw Material,Labour,and allocated overhead --->Work In Progress---> Finished Goods
Supplementary rate:- A supplementary rate wil be found out for rectifying the under absorption overheads.
WIP used- COGS = 286400-193080= 93320.00
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