Question

1. The following inventory information is available for Muscat Manufacturing Corporation for the year ended December 31, 2018:

                                                                     Beginning                 Ending

            Inventories:

            Raw materials                                    $68,000                 $76,000

            Work in process                                   36,000                   56,000

            Finished goods                                   44,000                   32,000

Total $148,000         $164,000

In addition, the following transactions occurred in 2018:

1.   Raw materials purchased on account, $280,000.

2.   Incurred factory labor, $320,000, all is direct labor. (Credit Factory Wages Payable).

3.   Incurred the following overhead costs during the year: Utilities $27,200, Depreciation on manufacturing machinery $32,000, Manufacturing machinery repairs $36,800, Factory insurance $36,000 (Credit Accounts Payable and Accumulated Depreciation).

4.   Assigned $320,000 of factory labor to jobs.

5.   Applied $ 140,000 of overhead to jobs.

Instructions

(a)   Journalize the above transactions.

(b)   Reproduce the manufacturing cost and inventory accounts. Use T-accounts.

(c)   From an analysis of the accounts, compute the following:

        1.   Raw materials used.

        2.   Completed jobs transferred to finished goods.

        3.   Cost of goods sold.

        4.   Under- or over applied overhead.

Answer 1