Question

In: Accounting

Gilbert Inc. manufactures custom conveyor systems for manufacturing and commercial operations. Erin Smith is Gilbert's management...

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 $

Solutions

Expert Solution

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.


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