Question

3.

Current information for the Healey Company follows:

Beginning raw materials inventory	$	25,200
Raw material purchases		70,000
Ending raw materials inventory		26,600
Beginning work in process inventory		32,400
Ending work in process inventory		38,000
Direct labor		52,800
Total factory overhead		40,000

All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is:

4.

The Duerr Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Duerr Company follows:

Beginning raw materials inventory	$	11,000
Ending raw materials inventory		14,000
Raw material purchases		88,000
Beginning work in process inventory		23,000
Ending work in process inventory		33,000
Direct labor		113,000
Total factory overhead		88,000
Beginning finished goods inventory		63,000
Ending finished goods inventory		43,000

The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:

13.

Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $580,000, and direct labor costs to be $290,000. Actual overhead costs for the year totaled $596,000, and actual direct labor costs totaled $324,000. At year-end, Factory Overhead account is:

Multiple Choice

• Overapplied by $52,000.

• Overapplied by $324,000.

• Underapplied by $52,000.

• Overapplied by $34,000.

18.Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 88,000 units, 70% complete as to materials and 20% complete as to conversion.
Units started and completed: 258,000.
Units completed and transferred out: 346,000.
Ending Inventory: 34,000 units, 40% complete as to materials and 15% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $45,200.
Costs in beginning Work in Process - Conversion: $87,700.
Costs incurred in October - Direct Materials: $710,740.
Costs incurred in October - Conversion: $1,044,530.

Calculate the cost per equivalent unit of conversion.

Answer 1

Healey Company

Total Manufacturing Costs = Raw Materials Used + Direct Labor + Factory Overhead

Raw materials used = Beginning Raw Materials Inventory + Raw Materials Purchases - Ending Raw Materials Inventory = $25,200 + $70,000 - $26,600 = $68,600

Total Manufacturing Costs = $68,600 + $52,800 + $40,000 = $161,400

Cost of goods manufactured = Beginning Work in Process + Total Manufacturing Costs - Ending Work in Process = $32,400 + $161,400 - $38,000 = $155,800

Duerr Company

Cost of Raw Materials used = Beginning raw materials inventory + Raw material purchases - Ending work in process inventory = 11000 + 88000 - 33000 = 66000

Cost of Goods Manufactured = Cost of Raw Materials used + Beginning work in process inventory - Ending work in process inventory + Direct labor + Total factory overhead = 66000 + 23000 - 33000 + 113000 + 88000 = 257000

Cost of Goods Sold = Beginning finished goods inventory + Cost of Goods Manufactured - Ending finished goods inventory = 63000 + 257000 - 43000 = 277000

Mango Company

Predetermined Overhead Rate = Overhead / Direct Labor = 580000 / 290000 = 2

Rate applied to actual direct labor = 2 x 324000 = 648000

Overapplied = 648000 - 596000 = 52000

Richards Corporation

Units :

Units completed and transferred out:346000 x 100% = 346000

Ending Inventory:34000 x 15% = 5100

Total Units = 346000 + 5100 = 351100

Conversion costs = Costs in beginning Work in Process - Conversion + Costs incurred in October - Conversion

= 87700 + 1044530

= 1132230

Conversion Cost per equivalent unit = $1132230 / 351100 units = $3.22 per unit