Question

In: Accounting

Gateway had only one job in process during August (Job 2922) and had no finished goods inventory on August 1st


Gateway had only one job in process during August (Job 2922) and had no finished goods inventory on August 1st. Job 2922 was started in July and finished during August. Data pertaining to the job is as follows:

Job 2922

Beginning WIP balance on August 1st 28,975

Materials ($172,000 was Direct) 190,000

Labor ($207,000 was Direct) 213,000

Additional Overhead Costs 116,000

Units Completed 200

Units in Process at the end of August 0

Units Sold during August 125

*Estimated total manufacturing overhead for August was $145,950. The predetermined overhead rate was made on the basis of direct labor hours. The estimated direct labor hours in August were 210 hours. The actual direct labor hours totaled 215 hours.

a) What is Gateway’s predetermined overhead rate for August?

b) What is the amount of manufacturing overhead that would be applied to units of product during the period?

c) Was overhead underapplied or overapplied for the month of August? And by how much?

d) What was the Adjusted Cost of Goods Sold for August?

(Note: You may use the direct or indirect method to solve.)

e) What is the total value of Finished Goods Inventory at the end of August?

Solutions

Expert Solution

Answer 1
Estimated manufacturing overhead $        145,950
Divided by: Estimated direct labor hours                    210
Predetermined overhead rate (per labor hour) $                695
Answer 2
Predetermined overhead rate (per labor hour) $                695
Multiply: Actual direct labor hours                    215
Applied manufacturing overhead $        149,425
Answer 3
Indirect material (190,000 - 172,000) $          18,000
Indirect labor (213,000 - 207,000) $            6,000
Additional Overhead Costs $        116,000
Actual manufacturing overhead $        140,000
Actual manufacturing overhead $        140,000
Less: Applied manufacturing overhead $        149,425
Under (Over) applied overhead $          (9,425)
Overapplied overhead $            9,425
Answer 4
Direct material $        172,000
Direct labor $        207,000
Applied overhead $        149,425
Total manufacturing cost $        528,425
Add: beginning work in progress $          28,975
Total cost of work in progress $        557,400
Less: ending work in progress (Units in Process at the end of August = 0) $                   -  
Cost of goods manufactured $        557,400
Cost of goods manufactured $        557,400
Add: Beginning Finished goods Inventory (no finished goods inventory on August 1st) $                   -  
inventory available for sale (Units Completed 200) $        557,400
Less: ending Finished goods Inventory (557400/200 = 2787) (200-125=75) (2787*75) $        209,025
Cost of goods Sold $        348,375
Add (less): Under (Over) applied of overhead $          (9,425)
Adjusted Cost of goods Sold $        338,950
Answer 5
Unit product cost (557400/200) $            2,787
Multiply: Units in finishied goods (200-125)                       75
Total value of Finished Goods Inventory at the end of August $        209,025

ekkarill92 answered 2 years ago
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