Question

Analyzing Manufacturing Cost Accounts

Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May:

Materials
May 1	Balance	26,400	May 31	Requisitions	(a)
31	Purchases	106,200

Work in Process
May 1	Balance	(b)	31	Completed jobs	(f)
31	Materials	(c)
31	Direct labor	(d)
31	Factory overhead applied	(e)

Finished Goods
May 1	Balance	0	May 31	Cost of goods sold	(g)
31	Completed jobs	(f)

Wages Payable
			May 31	Wages incurred	112,500

Factory Overhead
May 1	Balance	21,100	May 31	Factory overhead applied	(e)
31	Indirect labor	(h)
31	Indirect materials	14,100
31	Other overhead	99,100

In addition, the following information is available:

1. Materials and direct labor were applied to the following jobs in May:
   

   Job No.		Style	Quantity		Direct Materials				Direct Labor
   101		AF1	190			$18,730				$14,000
   102		AF3	380			30,620				25,000
   103		AF2	190			12,410				8,000
   104		VY1	240			27,840				24,000
   105		VY2	150			16,350				14,000
   106		AF4	140			7,080				5,000
   		Total	1,290			$113,030				$90,000

2. Factory overhead is applied to each job at a rate of 170% of direct labor cost.
3. The May 1 Work in Process balance consisted of two jobs, as follows:
   

   Job No.	Style	Work in Process, May 1
   101	AF1	$5,600
   102	AF3	15,500
   Total		$21,100

4. Customer jobs completed and units sold in May were as follows:
   

   Job No.	Style	Completed in May	Units Sold in May
   101	AF1	X	152
   102	AF3	X	304
   103	AF2		0
   104	VY1	X	202
   105	VY2	X	125
   106	AF4		0

Required:

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	May 1 Work in Process		Direct Materials		Direct Labor		Factory Overhead		Total Cost		Unit Cost		Units Sold	Cost of Goods Sold
No. 101		$ 5,600		$ 18,730		$ 14,000		$		$		$				$
No. 102		15,500		30,620		25,000
No. 103				12,410		8,000
No. 104				27,840		24,000
No. 105				16,350		14,000
No. 106				7,080		5,000
Total		$21,100		$113,030		$90,000		$		$						$

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 May 31 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
a.	Material requisitions=Total direct materials+Indirect materials=113030+14100=$ 127130
b.	Work in process beginning balance=Cost of Job 101 and 102 as on June 1=5600+15500=$ 21100
c.	Direct materials=Total direct materials cost=$ 113030
d.	Direct labor=$ 90000
e.	Factory overhead applied=Direct labor*140%=90000*170%=$ 153000
f.	Completed job=Cost of completed jobs
	Job No.				101	102	104	105	Total
	Beginning balance				5600	15500
	Direct materials				18730	30620	27840	16350
	Direct labor			a	14000	25000	24000	14000
	Factory overhead applied			(a*170%)	23800	42500	40800	23800
	Total				62130	113620	92640	54150	322540
	Completed job=$ 336270
g.	Cost of goods sold
	Job No.				101	102	104	105	Total
	Total cost			a	62130	113620	92640	54150
	Quantity produced			b	190	380	240	150
	Cost per unit			c=a/b	327	299	386	361
	Units sold			d	152	304	202	125
	Cost of goods sold			e=c*d	49704	90896	77972	45125	263697
	Cost of goods sold=$ 263697
h.	Indirect labor=Wages incurred-Direct labor=112500-90000=$ 22500
	Job No.	Quantity	June 1 work in process	Direct materials	Direct labor	Factory overhead	Total cost	Unit cost	Units sold	Cost of goods sold
		a	b	c	d	e=d*170%	f=b+c+d+e	g=f/a	h	i=g*h
	101	190	5600	18730	14000	23800	62130	327	152	49704
	102	380	15500	30620	25000	42500	113620	299	304	90896
	103	190		12410	8000	13600	34010	179	0	0
	104	240		27840	24000	40800	92640	386	202	77972
	105	150		16350	14000	23800	54150	361	125	45125
	106	140		7080	5000	8500	20580	147	0	0
	Total		21100	113030	90000	153000	377130			263697
2	June 31 balances
	Materials:
					$	$
	Beginning balance					26400
	Purchases					106200
						132600
	Less:
	Direct materials				113030
	Indirect materials				14100	127130
	July 31 balance					5470