Question

Jurvin Enterprises is a manufacturing company that had no beginning inventories. A subset of the transactions that it recorded during a recent month is shown below.

1. $76,500 in raw materials were purchased for cash.
2. $72,000 in raw materials were used in production. Of this amount, $65,100 was for direct materials and the remainder was for indirect materials.
3. Total labor wages of $151,000 were incurred and paid. Of this amount, $134,100 was for direct labor and the remainder was for indirect labor.
4. Additional manufacturing overhead costs of $126,100 were incurred and paid.
5. Manufacturing overhead of $126,900 was applied to production using the company’s predetermined overhead rate.
6. All of the jobs in process at the end of the month were completed.
7. All of the completed jobs were shipped to customers.
8. Any underapplied or overapplied overhead for the period was closed to Cost of Goods Sold.

Required:

1. Post the above transactions to T-accounts.
2. Determine the adjusted cost of goods sold for the period.

Answer 1

1. Post the transactions to T-accounts.

Cash		Raw Materials
Beg. Bal.		a.	$76,500		Beg. Bal.
		c.	$151,000		a.	$76,500	b.	$72,000
		d.	$126,100		End. Bal.	$4,500
End. Bal.			$353,600
Work in Process		Finished Goods
Beg. Bal.					Beg. Bal.
b.	$65,100	f.	$326,100		f.	$326,100	g.	$326,100
c.	$134,100				End. Bal.	$0
e.	$126,900
End. Bal.	$0
Manufacturing Overhead		Cost of Goods Sold
Beg. Bal.					Beg. Bal.
b.	$6,900	e.	$126,900		g	$326,100
c.	$16,900	h.	$23,000		h	$23,000
d.	$126,100				End. Bal.	$349,100
End. Bal.	$0

2. Determine the adjusted cost of goods sold for the period.

The adjusted COGS = $349,100

Determination of adjusted Cost of Goods Sold
Particulars	Amount
Direct Materials	$65,100
Direct Labour	$134,100
Manufacturing Overhead Applied	$126,900
Cost of Completed Goods	$326,100
Add: Underapplied Overhead (Refer Note)	$23,000
Adjusted Cost of Goods Sold	$349,100
Working Note
Calculation of under/(over) applied overhead
Particulars	Amount
Indirect Materials ($72,000 - $65,100)	$6,900
Indirect Labour ($151,000 - $134,100)	$16,900
Other Manufacturing Overhead	$126,100
Cost of Completed Goods	$149,900
Less: Applied Overhead	($126,900)
Underapplied Overhead	$23,000