Question

 

The following is a summary of the May 2016 operations of Reagan Company that makes and sells airplane models. Suppose that the company uses the FIFO method.

	Physical Units	Direct Materials	Conversion Costs
WIP, beginning inventory	28,000	$39,200	$30,800
Degree of completion for BI		100%	25%
Started in May	60,000
Completed and transferred out in May	66,000
WIP, ending inventory	22,000
Degree of completion for EI		100%	50%
Costs added in May		$90,000	$280,000

What is the amount of direct materials cost assigned to ending WIP at the end of May?

Group of answer choices

$39,200

$22,000

$44,000

$33,000

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Question 291 pts

What is the cost of goods transferred out during May?

Group of answer choices

$517,000

$293,000

$447,000

$363,000

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Question 301 pts

Norland Company's total overhead budget for 2018 shows variable overhead costs of $36,000 and fixed overhead costs of $32,000. The budgeted output was 25,000 units. Actual total overhead costs incurred in 2018 were $61,400 for an output of 20,000 units.

The total overhead variance for Norland Co. for 2018 was:

Group of answer choices

$6,400 unfavorable

$7,000 unfavorable

$5,800 unfavorable

$6,000 unfavorable

Answer 1

28)	Cost of Ending WIP
		Units	Cost/eq. units	Costs
	Direct Material	22000	$                 1.50	$    33,000.00
	Conversion	11000	$                 4.00	$    44,000.00
			Total	$    77,000.00

29)	Cost of Goods Transferred Out
	Existing cost of 28000 units =		$       70,000.00	($ 39200 + $ 30800)
	Cost of Completing 21000 units:
	Conversion cost =		$       84,000.00	(21000 units x $ 4)
	Cost of 38000 units =		$    2,09,000.00	(38000 units x $ 5.5)
		Total	$   3,63,000.00

Workings:

Statement of equivalent production					Degree of completion
					Direct Material			Conversion
Particulars	Units	Particulars	Units		%	Units		%	Units
Opening WIP	28000	Transfer to next process:
Material Introduced	60000	From O/p WIP	28000		-	-		75%	21000
		From Current Intro	38000		100%	38000		100%	38000
		Closing WIP	22000		100%	22000		50%	11000
	88000		88000			60000			70000

Statement of cost per equivalent production
Element of costs	Units	Costs	Cost/eq. units
Direct Material	60000	$        90,000.00	$                  1.50
Conversion	70000	$     2,80,000.00	$                  4.00
			$                  5.50

30)	Total Budgeted OH Cost			$ 68,000.00	($ 36000 + $ 32000)
	Budgeted Output			25000	units
	Recovery Rate			$           2.72
	Actual Output			20000	units
	Recovered OH			$ 54,400.00
	Actual OH			$ 61,400.00
	Total OH Variance			$   7,000.00	(unfavorable)