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	38,100	June 30	Requisitions	(A)
June 30	Purchases	153,000

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	123,800

Factory Overhead
June 1	Balance	20,900	June 30	Factory overhead applied	(E)
June 30	Indirect labor	(H)
June 30	Indirect materials	20,300
June 30	Other overhead	65,200

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	220			$26,860				$16,000
202		T200	370			37,500				24,000
203		T400	200			17,200				8,000
204		S200	310			47,120				31,000
205		T300	160			23,100				15,000
206		S100	150			11,000				5,000
Total			1,410			$162,780				$99,000

b. Factory overhead is applied to each job at a rate of 130% 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	$6,300
202	T200	14,600
Total		$20,900

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	176
202	T200	X	296
203	T400		0
204	S200	X	260
205	T300	X	133
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		$ 6,300		$ 26,860		$ 16,000		$		$		$				$
No. 202		14,600		37,500		24,000
No. 203				17,200		8,000
No. 204				47,120		31,000
No. 205				23,100		15,000
No. 206				11,000		5,000
Total		$20,900		$162,780		$99,000		$		$						$

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		$6300		$26860		$16000		(16000*130%)= $20800		$69960		(69960/220)= $318		176		($318*176)= $55968
No. 202		14600		37500		24000		(24000*130%)= 31200		107300		(107300/370)= 290		296		(290*296)= 85840
No. 203				17200		8000		(8000*130%)= 10400		35600		-
No. 204				47120		31000		(31000*130%)= 40300		118420		(118420/310)= 382		260		(382*260)= 99320
No. 205				23100		15000		(15000*130%)= 19500		57600		(57600/160)= 360		133		(360*133)= 47880
No. 206				11000		5000		(5000*130%)= 6500		22500		-
Total		$20900		$162780		$99000		$128700		$411380						$289008

a) Materials requisitions= Direct materials+Indirect materials

= $162780+20300= $183080

b) Work in process beginning balance= $20900

c) Direct materials= $162780

d) Direct labor= $99000

e) Factory overhead applied= $128700

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

= $69960+107300+118420+57600= $353280

g. Cost of goods sold= $289008

h. Indirect labor= Total wages incurred-Direct labor

= $123800-99000= $24800

2) Materials= Beginning balance+Purchases-Requisitions

= $38100+153000-183080= $8020

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

= $20900+162780+99000+128700-353280= $58100

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

= $0+353280-289008= $64272

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

= $20900+24800+20300+65200= $131200

Factory overhead= Factory overhead applied-Actual factory overhead

= $128700-131200= $2500 underapplied

Materials	$8020
Work in process	$58100
Finished goods	$64272
Factory overhead	$2500 underapplied

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