In: Accounting
Gilbert Inc. manufactures custom conveyor systems for manufacturing and commercial operations. Erin Smith is Gilbert's management accountant and she is in the process of training a new employee, Heather Fontenot, on the order costing system by Gilbert Inc. uses. The costing system is based on normal costs; overhead costs are allocated based on the cost of direct labor. Heather has collected the following order cost records for July:
Order # |
Raw Material |
Direct Labor |
FIF Imputed |
Total Cost |
667 |
$5901 |
$1730 |
$1990 |
$9621 |
669 |
$18 312 |
$1810 |
$2082 |
$22204 |
670 |
$$406 |
$500 |
$575 |
$1481 |
671 |
$51 405 |
$9500 |
$10925 |
$71830 |
672 |
$9 615 |
$550 |
$633 |
$10798 |
FIF: indirect manufacturing costs
To explain the missing order number, Erin informed Heather that job # 668 had been completed and delivered in June. She also told him that Order No. 667 was the only order in progress at the beginning of July. At that time, $ 4,300 had been allocated as the cost of raw materials and $ 900 as the cost of direct labor. At the end of July, order N. 671 was not completed; all others had been completed. Among the completed orders, orders N. 667, 669 and 672 were delivered in July. Heather also obtains a total amount of $ 17,500 corresponding to the actual indirect manufacturing costs incurred in July. Erin asked Heather several questions to determine if she understood the cost-to-order system. Help Heather answer the following questions.
1.a What is the predetermined imputation rate used by Gilbert
INC?
a. 15% b. 140% c. 40% d. 115%
1.b What was the total cost of stocks of products in progress at the beginning of July?
a. 4 300 $ b. 5
200 $ c.1035 $
d. 6
235 $
1.c What was the total primary cost incurred for the month of July?
a. 81 339 $ b. 94 529 $
c. 99 729 $
d. 13 190 $
1.d What was the total cost of stocks of finished products at the end of July?
a. 9 621 $ b.
11 102 $ c. 1 481 $
d. 10 798
$
1.e How much were the indirect manufacturing costs under-charged or over-charged?
a. sub-imputed by 3 285 $ b. Over-charged by 1 295 $
c. Over-charged by 3 285 $ d.
sub-imputed by 1 295 $
1.f What is the final balance of the cost of products sold if the indirect or under-charged manufacturing costs were adjusted.
a. 38 060 $ b. 15 856 $ c. 50 153 $ d. 48 858 $
1a. d. 115%
1b. d. $ 6,235
1c. c. $ 99,729
1d. c. $ 1,481
1e. d. sub-imputed by $ 1,295
1f. c. $ 50,153.