Question

Analyzing Manufacturing Cost Accounts

Fire Rock Company manufactures designer paddle boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for June:

Materials
June 1	Balance	28,300	June 30	Requisitions	(A)
June 30	Purchases	113,600

Work in Process
June 1	Balance	(B)	June 30	Completed jobs	(F)
June 30	Materials	(C)
June 30	Direct labor	(D)
June 30	Factory overhead applied	(E)

Finished Goods
June 1	Balance	0	June 30	Cost of goods sold	(G)
June 30	Completed jobs	(F)

Wages Payable
			June 30	Wages incurred	112,500

Factory Overhead
June 1	Balance	21,300	June 30	Factory overhead applied	(E)
June 30	Indirect labor	(H)
June 30	Indirect materials	15,100
June 30	Other overhead	88,500

In addition, the following information is available:

a. Materials and direct labor were applied to six jobs in June:

Job No.		Style	Quantity		Direct Materials				Direct Labor
201		T100	180			$18,500				$14,000
202		T200	390			33,110				26,000
203		T400	200			14,800				8,000
204		S200	250			31,100				24,000
205		T300	150			17,450				14,000
206		S100	110			5,880				4,000
Total			1,280			$120,840				$90,000

b. Factory overhead is applied to each job at a rate of 160% of direct labor cost.

c. The June 1 Work in Process balance consisted of two jobs, as follows:

Job No.	Style	Work in Process, June 1
201	T100	$5,400
202	T200	15,900
Total		$21,300

d. Customer jobs completed and units sold in June were as follows:

Job No.	Style	Completed in June	Units Sold in June
201	T100	X	144
202	T200	X	312
203	T400		0
204	S200	X	210
205	T300	X	125
206	S100		0

1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers.

Job No.	Quantity	June 1 Work in Process		Direct Materials		Direct Labor		Factory Overhead		Total Cost		Unit Cost		Units Sold	Cost of Goods Sold
No. 201		$ 5,400		$ 18,500		$ 14,000		$		$		$				$
No. 202		15,900		33,110		26,000
No. 203				14,800		8,000
No. 204				31,100		24,000
No. 205				17,450		14,000
No. 206				5,880		4,000
Total		$21,300		$120,840		$90,000		$		$						$

a. Materials requisitions $

b. Work in process beginning balance $

c. Direct materials $

d. Direct labor $

e. Factory overhead applied $

f. Completed jobs $

g. Cost of goods sold $

h. Indirect labor $

2. Determine the June 30 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances.

Materials	$
Work in process	$
Finished goods	$
Factory overhead	$

Answer 1

1)

Job No.	Quantity	June 1 Work in Process		Direct Materials		Direct Labor		Factory Overhead		Total Cost		Unit Cost		Units Sold	Cost of Goods Sold
No. 201		$ 5400		$18500		$14000		(14000*160%)= 22400		$60300		(60300/180)= $335		144		($335*144)= $48240
No. 202		15900		33110		26000		(26000*160%)= 41600		116610		(116610/390)= 299		312		(299*312)= 93288
No. 203				14800		8000		(8000*160%)= 12800		35600		-
No. 204				31100		24000		(24000*160%)= 38400		93500		(93500/250)= 374		210		(374*210)= 78540
No. 205				17450		14000		(14000*160%)= 22400		53850		(53850/150)= 359		125		(359*125)= 44875
No. 206				5880		4000		(4000*160%)= 6400		16280		-
Total		$21300		$120840		$90000		$144000		$376140						$264943

a) Materials requisitions= Direct materials+Indirect materials

= $120840+15100= $135940

b) Work in process beginning balance= $21300

c) Direct materials= $120840

d) Direct labor= $90000

e) Factory overhead applied= $144000

f. Completed jobs= Total cost of Job No 201+Total cost of Job No 202+Total cost of Job No 204+Total cost of Job No 205

= $60300+116610+93500+53850= $324260

g. Cost of goods sold= $264943

h. Indirect labor= Total wages incurred-Direct labor

= $112500-90000= $22500

2) Materials= Beginning balance+Purchases-Requisitions

= $28300+113600-135940= $5960

Work in process= Beginning balance+Materials+Direct labor+Factory overhead-Completed jobs

= $21300+120840+90000+144000-324260= $51880

Finished goods= Beginning balance+Completed jobs-Cost of goods sold

= $0+324260-264943= $59317

Actual factory overhead= Balance+Indirect labor+Indirect materials+Other overhead

= $21300+22500+15100+88500= $147400

Factory overhead= Factory overhead applied-Actual factory overhead

= $144000-147400= $3400 underapplied

Materials	$5960
Work in process	$51880
Finished goods	$59317
Factory overhead	$3400 underapplied

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