In: Accounting
i. Cheaper manufacturing company developed the following data:
Beginning work in process inventory $6000
Direct material used 360,000
Actual overhead 420,000
Overhead applied 405,000
Total manufacturing cost 960,000
Ending work in process 45,000
How much are the direct labour costs for the period?
a. $175,000
b. $195,000
c. $200,000
d. $180,000
ii. What is the production cost report used for?
a. It is an external report provided to shareholders.
b. It shows costs charged to a department and costs accounted for.
c. It shows equivalent units of production but not physical units.
d. It shows the basis on which overhead is allocated.
iii. use the following information: At January 1, 2016, Jake, Inc. has beginning inventory of 4,000 surfboards. Jake estimates it will sell 15,000 units during the first quarter of 2016, with a 10% increase in sales each quarter. Jake’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs $200 and is sold for $250.
How many units should Jake produce during the first quarter of 2016?
a. 15,125
b. 15,0000
c. 12,500
d. 11,000
SOLUTION 1. direct materials =360000
direct labour=195000
overheads applied=405000
total manufacturing costs=960000
in cost accounting overheads applied is taken into consideration , rather than actual overheads but the difference of under or over absorbed overheads shall be adjusted.
2.answer is part 2.
because production cost report is used for internal management purposes,further overheads are not allocated on the basis of production costs because production costs already includes the element of overheads.
3.opening inventory=4000
sales=15000
closing inventory required=(15000+10%)*25%=4125
units that jake should produce=15000+4125-4000=15125