Question

Please answer all parts. Please! No need to show working.

At Allen Company manufacturing overhead is estimated at 150% of direct labor hours. Overhead was estimated to be $575,000 and direct labor hours were estimated to be 360,000.

     

Actual direct labor hours and actual direct labor costs for the year amounted to 400,000 hours and $700,000.

In addition, Allen Company incurred the following actual costs during the year:

• Administrative expenses, $100,000
• Depreciation expense on fixed assets, $500,000 (80% of the depreciation expense was related to manufacturing activities)
• Indirect material costs, $25,000
• Indirect labor costs, $45,000
• Utility expense on the manufacturing facility, $125,000
• Insurance expense on the manufacturing facility, $35,000
• Marketing expenses, $75,000

• Sales & promotion expenses, $25,000

Allen Company had the following inventory balances at the beginning and end of the year:

           

	January 1	December 31
Finished goods	$450,000		$675,000
Work in process	600,000		650,000
Raw (direct) materials	350,000		400,000

During the year, the company purchased $150,000 of raw materials and generated sales of $2,500,000.

1. What amount of raw materials were used during the period?
2. What is the amount of prime costs?
3. What is the predetermined manufacturing overhead rate?
4. What amount is applied to manufacturing overhead?
5. What is the amount of Manufacturing Costs added for the period?
6. What is the Cost of Goods Manufactured?
7. At the end of year, was manufacturing overhead over- or under-applied?
8. Refer to the previous question. By what amount was manufacturing overhead over- or under-applied?
9. What is Cost of Goods Sold, after adjusting for any under-or over-applied overhead?
10. What is Gross Profit?
11. What are total Selling, General & Administrative Expenses?
12. What is Net Income or Loss?

Answer 1