Question

Conundrum, Inc. manufactures puzzles. Due to a fire in the administrative offices, the accounting records for September of the current year were partially destroyed. You have been able to piece together the following information from the ledger.

Raw Material Inventory: Bal 9/30 Dr $45,000 | Cr $40,000

WIP Inventory: Bal 8/31 Dr $8,000 | Cr ------

MOH: Dr $60,000 | Cr ----------

Wages Payable: Dr ----- | Cr $16,000 Bal 9/30

A/P: Dr ------ | Cr $12,000 Bal 8/31

Finished Goods Inventory: Bal 8/31 Dr $35,000 | Cr -------

COGS: Dr ------- | Cr ----------

Sales Rev: Dr --------- | Cr ----------

A/R: Bal 8/31 Dr $8,000 | Cr --------

Upon examining various source documents and interviewing several employees, you were able to gather the following additional information.

a.	Collections of accounts receivable during September amounted to $205,000.
b.	Sales revenue in September was 120 percent of cost of goods sold. All sales are on account.
c.	Overhead is applied using an annual predetermined overhead rate using direct-labor hours (based on practical capacity).
d.	The budgeted overhead for the current year is $720,000.
e.	Budgeted direct-labor cost for the current year is $960,000. The direct-labor rate is $20 per hour.
f.	The accounts payable balance on September 30 was $1,000. Only purchases of raw material are credited to accounts payable. A payment of $81,000 was made on September 15.
g.	September’s cost of goods sold amounted to $181,000.
h.	The September 30 balance in finished-goods inventory was $4,075.
i.	Payments of $79,500 were made to direct-labor employees during September. The August 31 balance in the Wages Payable account was $1,000.
j.	The actual manufacturing overhead for September was $60,000.
	k. An analysis of the puzzles still in process on September 30 revealed that so far these items have required 500 hours of direct labor and $20,600 of direct material. Required: 1. Calculate the following amounts. d. September 30 balance in work-in-process inventory. e. Direct labor added to work in process during September. f. Applied overhead for September. g. Cost of goods completed during September. h. Raw material used during September. i. August 31 balance in raw-material inventory. j. Overapplied or underapplied overhead for September. PLEASE answer the bolded question, d-j. Thank you.

Answer 1

Estimated direct labor hours = 960000/20=48000

Predetermined overhead rate = Estimated overhead /Estimated DLH

              = 720000/48000

              = $ 15 DLH

D) Cost of Ending WIP : 20600 dIrect material +[500*20]direct labor + [500*15] overhead applied

           = 20600+10000+ 7500

           = 38100

E)Direct labor added to work in process = Ending wage payable +payment -beginning wage payable

        = 16000+79500-1000

          = 94500

F)Total manufacturing cost incurred = Ending WIP +COst of goods completed - Beginning WIP

              = 38100+ 150075 - 8000

              = 180175

Overhead applied =Total manufacturing cost -material used- labor cost incurred

           = 180175 - 40000 - 94500

             = $ 45675

g)

Cost Of Goods manufactured/completed : Ending Finished goods + cost of goods sold - Beginning Finished goods

                      = 4075 +181000 - 35000

                     = 150075

h)Purchase of raw material : payment +ending A/P- beginning A/P

       = 81000+1000-12000

          = 70000

Raw material used : 40000

I)August 31 balance in raw-material inventory.: Ending RM + Use- purchase

             = 45000+40000-70000

             = $ 15000

j)Overhead underapplied =actual -applied

        = 60000-45675

           = $ 14325