Question

Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $16.00 per direct labor-hour and $12.00 per direct labor-hour, respectively. The company’s direct labor wage rate is $20.00 per hour. The following information pertains to Job N-60:

	Assembly				Testing & Packaging
Direct materials	$	340			$	25
Direct labor	$	180			$	40

Required:

1. What is the total manufacturing cost assigned to Job N-60?

2. If Job N-60 consists of 10 units, what is the unit product cost for this job? (Round your answer to 2 decimal places.)

/

The following data from the just completed year are taken from the accounting records of Mason Company:

Sales	$	653,000
Direct labor cost	$	90,000
Raw material purchases	$	133,000
Selling expenses	$	104,000
Administrative expenses	$	42,000
Manufacturing overhead applied to work in process	$	206,000
Actual manufacturing overhead costs	$	225,000

Inventories	Beginning		Ending
Raw materials	$	8,500	$	10,600
Work in process	$	5,700	$	20,000
Finished goods	$	77,000	$	25,800

Required:

1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

2. Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold.

3. Prepare an income statement.

/

The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year.

Manufacturing Overhead
(a)	506,880	(b)	422,400
Bal.	84,480

Work in Process
Bal.	2,600	(c)	790,000
	330,000
	95,000
(b)	422,400
Bal.	60,000

Finished Goods
Bal.	30,000	(d)	680,000
(c)	790,000
Bal.	140,000

Cost of Goods Sold
(d)	680,000

The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows:

Work in Process, ending	$	28,800
Finished Goods, ending		67,200
Cost of Goods Sold		326,400
Overhead applied	$	422,400

For example, of the $60,000 ending balance in work in process, $28,800 was overhead that had been applied during the year.

Required:

1. Identify reasons for entries (a) through (d).

2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry.

3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.

Answer 1

1) Total manufacturong costs to JOB N60

	Assembly	Testing and packaging	Total
Direct materials	$340	$25	$365
Direct labour	$180	$40	$220
Direct labour hours	$9	$2
Manufacturing overhead	$144	$24	$168
Total manufacturing costs	$664	$89	$753

2) Unit product cost for Job N-60 =  753 / 10

= $75.3

Question 2

Cost of goods manufactured = Direct material used + direct labour + manufacturing overhead appied + opening WIP - closing WIP

Schedule of COGM

Direct materials used
Opening materials	$8,500
Purchases	$1,33,000
Closing materials	$10,600
Total material used		$1,30,900
Direct labor		$90,000
Manufacuting overhead applied		$2,06,000
Total manufacturing costs		$4,26,900
Opening WIP	$5,700
Closing WIP	$20,000
Cost of goods manufactured		$4,12,600

Schedule of Cost of goods sold

Beginning finished goods	$77,000
Add: cost of goods manufactured	$4,12,600
Add: overheads underapplied	$19,000
Less: closing finished goods	$25,800
Cost of goods sold	$4,82,800

Income Statement

Sales	$6,53,000
Cost of goods sold	$4,82,800
Gross profit	$1,70,200
Admin expenses	$42,000
Selling expenses	$1,04,000
Net income	$24,200