Question

Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Bal. 1/1 23,000 Credits ? Debits 136,000 Bal. 12/31 33,000 Manufacturing Overhead Debits 204,720 Credits ? Work in Process Bal. 1/1 28,000 Credits 494,000 Direct materials 98,000 Direct labor 174,000 Overhead 222,720 Bal. 12/31 ? Factory Wages Payable Debits 201,000 Bal. 1/1 13,000 Credits 196,000 Bal. 12/31 8,000 Finished Goods Bal. 1/1 48,000 Credits ? Debits ? Bal. 12/31 72,000 Cost of Goods Sold Debits ? Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of goods manufactured for the year? 5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer. 6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? 7. Was manufacturing overhead underapplied or overapplied? By how much? 8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $10,000 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

Answer:
1)
Particulars	Amount (in $ )
Beginning Raw Materials	$ 23,000
Add: Purchases	$ 136,000
Less: Ending Raw Materials	($ 33,000)
Cost of raw materials used in production	$ 126,000
2)
Particulars	Amount (in $ )
Raw materials used in production	$ 126,000
Less: Work in Process -   Raw Materials	($ 98,000)
Indirect materials	$ 28,000
3)
Particulars	Amount (in $ )
Factory Wages Payable - Beginning	$ 196,000
Less: Work in Process -   Direct Labor	($ 174,000)
Indirect labor	$ 22,000
4)
Cost of goods manufactured             = Total Work in Process Credit balance	$ 494,000
5)
Particulars	Amount (in $ )
Beginning Finished Goods	$ 48,000
Add:   Cost of goods manufactured	$ 494,000
Less: Ending Finished Goods	($ 72,000)
Unadjusted cost of goods sold	$ 470,000
6)
Predetermined overhead rate          = Factory Overhead / Direct Labor Cost          =   $ 222,720 / $ 174,000	128% of direct labor cost
7)
Applied overhead     = 128% of direct labor cost      = 128% x $ 174,000      = $ 222,720
Overhead Under/over Applied          = Actual overhead (-) Applied overhead          = $ 204,720 (-) $ 222,720	$ 18,000 (Over applied)
8)
Particulars	Amount (in $ )
Opening Balance - Work in Process	$ 28,000
Direct materials - Work in Process	$ 98,000
Add: Direct labor - Work in Process	$ 174,000
Add: Overhead   - Work in Process	$ 222,720
Less: Cost of goods manufactured	($ 494,000)
Ending Balance of work in process	$ 28,720
Given, Direct labor Cost	$ 10,000
Applied overhead cost     = 128% of Direct labor Cost     = 128% x $ 10,000	$ 12,800
Direct Material cost    = Ending Balance of work in process       (-) Direct labor Cost (-) Applied overhead cost    = $ 28,720 (-) $ 10,000 (-) $ 12,800	$ 5,920