Recording Manufacturing Costs, Preparing a Cost of Goods Manufactured and Sold Report, and Calculating Income from Operations
Dobson Manufacturing Company uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor dollars. At the beginning of the most recent period, the company estimated its total direct labor cost to be $50,000 and its total manufacturing overhead cost to be $75,000.
Several incomplete general ledger accounts showing the transactions that occurred during the most recent accounting period follow:
Raw Materials Inventory | ||
Beginning Balance | 15,000 | ? |
Purchases | 95,000 |
|
Ending Balance | 30,000 |
|
Finished Goods Inventory | ||
Beginning Balance | 40,000 | ? |
Cost of Goods Completed | ? |
|
Ending Balance | 50,000 |
|
Manufacturing Overhead | |||
Indirect Materials | 10,000 | ? | Applied Overhead |
Indirect Labor | 15,000 |
|
|
Factory Depreciation | 13,000 |
|
|
Factory Rent | 7,000 |
|
|
Factory Utilities | 3,000 |
|
|
Other Factory Costs | 10,000 |
|
|
Actual Overhead | 58,000 |
|
|
Work in Process Inventory | ||
Beginning Balance | 30,000 | ? |
Direct Materials | 70,000 |
|
Direct Labor | 40,000 |
|
Applied Overhead | ? |
|
Ending Balance | 20,000 |
|
Cost of Goods Sold | ||
Unadjusted Cost of Goods Sold | ? |
|
Adjusted Cost of Goods Sold | ? |
|
Sales Revenue | ||
| 300,000 | Sales Revenue |
Selling and Administrative Expenses | ||
Adm. Salaries | 28,000 |
|
Office Depreciation | 20,000 |
|
Advertising | 15,000 |
|
Ending balance | 63,000 |
|
Required:
1.Calculate the predetermined overhead rate.
2. Fill in the missing values in the T-accounts.
3. Compute over–or underapplied overhead.
4. Prepare a statement of cost of goods manufactured and sold including the adjustment for over–or underapplied overhead.
5. Prepare a brief income statement for the company.
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