Question

Selected T-accounts of Moore Company are given below for the just completed year: Bal. 1/1 Debits Bal. 12/31 Raw Materials 16,000 Credits 122,000 26,000 Manufacturing Overhead 233,800 Credits Debits 473,000 Work in Process Bal. 1/1 21,000 Credits Direct materials 91,000 Direct labor 153,000 Overhead 244,800 Bal. 12/31 2 Factory Wages Payable Debits 187,000 Bal. 1/1 Credits Bal. 12/31 Finished Goods Bal. 1/1 41,000 Credits Debits ? Bal. 12/31 61,500 Cost of Goods Sold Debits ? 9,500 182,000 4,500 7 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 $8,250 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

Answer no. 1

Raw material inventory at beginning of year 1/1	$16,000
Add: Purchase of raw materials(debits)	$122,000
Less: Raw material inventory at the end of year 12/31	$26,000
Cost of raw materials put into production	$112,000

Answer no. 2

Cost of raw materials put into production	$112,000
Less: Direct material debited to work in progress	$91,000
Indirect materials cost	$21,000

Answer no .3

Total factory wages accured during the year	$182,000
Less: Direct labour cost debited to work in progress	$153,000
Cost of indirect labours	$29,000

Answer no .4

Cost of goods manufactured for the year	$473,000
(amount credited to work in progress)

Answer no .5

Finished good inventory at beginning of year 1/1	$41,000
Add: Cost of good manufacured	$473,000
Cost of good available for sale	$514,000
Less: Finished good inventory at end of year 12/31	$61,500
Cost of good sold	$452,500

Answer no .6

Predetermined Overhead rate =Manufacturing overhead applied / Direct labour cost *100

= ($244,800 / 153,000) *100 =160%

Answer no .7

Actual manufacturing OH cost ( from manufacturing OH account)	$233,800
Less: Applied manufacturing OH ( from work in progress)	$244,800
Overapplied Overhead	($11,000)

Answer no .8

Ending balance in work in progress(note 1)	$36,800
Direct material cost ($36,800 - $8,250 - $13,200)	$15,350
Applied overhead( 8,250* 160%)	$13,200

Note :

Work in progress at the beginning of year 1/1	$21,000
Add: Direct materail debited to work in progress	$91,000
Add: Direct labours debited to work in progress	$153,000
Add : Overhead debited to work in progress	$244,800
Less: Cost of good manufactured for the year	$473,000
( Amount credited to work in progress)
Ending balance in work in progress	$36,800