Analyzing Flow of Manufacturing and Nonmanufacturing Costs, Preparing CGM Report and Income Statement
Lamonda Corp. uses a job order cost system. On April 1, the accounts had the following balance.
Raw materials inventory | $ 30,000 |
Work in process inventory | 20,000 |
Finished goods inventory | 125,000 |
The following transactions occurred during April.
(a)Purchased materials on account, $233,670.
(b)Requisitioned materials, $112,300, of which $16,900 was for general factory use.
(c)Recorded factory labor of $225,700, of which $43,875 was indirect.
(d)Incurred other costs:
Selling expense | $36,000 |
Factory utilities | 24,700 |
Administrative expenses | 51,850 |
Factory rent | 12,000 |
Factory depreciation | 21,000 |
(e)Applied overhead during the month totaling $133,560.
(f)Completed jobs costing $263,750.
(g)Sold jobs costing $324,670.
(h)Recorded sales revenue of $500,000.
Required:
1. Post the April transaction to the following T-accounts. (Note: Some transactions will affect other accounts not shown; e.g., Cash, Accounts Payable, Accumulated Depreciation.) You do not need to show the offsetting debit or credit to those accounts.
Raw Materials Inventory | |
Bal. 30,000 |
|
Work in Process Inventory | |
Bal. 20,000 |
|
Finished Goods Inventory | |
Bal. 25,000 |
|
Manufacturing Overhead | |
|
|
Sales Revenue | |
|
|
Cost of Goods Sold | |
|
|
Nonmanufacturing Expenses | |
|
|
2.Compute the balance in the accounts at the end of April.
3. Compute over–or underapplied manufacturing overhead. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will it increase or decrease?
4. Prepare Lamonda’s cost of goods manufactured report for April.
5. Prepare Lamonda’s April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over–or underapplied manufacturing overhead.
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