VS uses Direct-labor cost in dollars to allocate its overhead. For the year of 2013; •...

VS uses Direct-labor cost in dollars to allocate its overhead. For the year of 2013; • No beginning inventories • Estimated overhead at Jan 1st , $2,000,000 and estimated Direct-labor cost, $400,000 • Actual overhead for the year, $2,825,000 • During the year, VS started producing 30,000, finished 25,000 and sold 21,000 units • Other information for the year: WIP FG COGS DM in $85,000 $62,000 $320,000 DL in $60,000 $57,000 $468,000 VS uses the prorate approach to distribute overapplied and underapplied MO amounts. What final amount of COGS will VS report on its income statement for the year?

Expert Solution

Particulars	FG	WIP	COGS	Total
DM	85,000.00	62,000.00	3,20,000.00	4,67,000.00
DLC	60,000.00	57,000.00	4,68,000.00	5,85,000.00
Units	4,000.00	5,000.00	21,000.00	30,000.00
OH Absoption Rates				5.00	Estimated OH/Estimated DLC
Absorbed Overheads	3,00,000.00	2,85,000.00	23,40,000.00	29,25,000.00	OH Absorption Rates * DLC
Overheads Actually Incurred				28,25,000.00
over absorbed OH				1,00,000.00	Absorbed Overheads - OH Actually Incurred
Adjustment Rate				0.17	Over Absorbed OH / Actual DLC
Adjustment for Over Absorbed OH	10,256.41	9,743.59	80,000.00	1,00,000.00	Adjustment Rate * Actual DLC
Finally Absorbed OH	2,89,743.59	2,75,256.41	22,60,000.00	28,25,000.00

ekkarill92 answered 2 years ago

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