Question

Rundle Manufacturing started in 2018 with the following account balances:

Cash	$	5,400
Common stock		3,968
Retained earnings		5,800
Raw materials inventory		1,200
Work in process inventory		850
Finished goods inventory (380 units @ $6.10 each)		2,318

  

Transactions during 2018

1.      Purchased $2,930 of raw materials with cash.

2.      Transferred $3,770 of raw materials to the production department.

3.      Incurred and paid cash for 210 hours of direct labor @ $15.30 per hour.

4.      Applied overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.50 per direct labor hour.

5.      Incurred actual overhead costs of $3,700 cash.

6.      Completed work on 1,210 units for $5.90 per unit.

7.      Paid $1,100 in selling and administrative expenses in cash.

8.      Sold 1,210 units for $10,500 cash revenue (assume FIFO cost flow).

9.      Rundle charges overapplied or underapplied overhead directly to Cost of Goods Sold.

Required

a.      Record the preceding events in a horizontal statements model. The beginning balances are shown as an example.

I cannot figure out 8b & 9. Also, can I please have help creating a schedule of cost of goods manufactured and sold for 2018?

Answer 1

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Requirement -1
		Cash	Raw Material Inventory	work in Process	Finished Goods	Manufacturing Overhead	Common Stock	Retained Earning
Beginning Balance		$      5,400	$                              1,200	$                   850	$                   2,318		$                    3,968	$                    5,800
1		$    -2,930	$                              2,930
2			$                             -3,770	$                3,770
3	210*15.3	$    -3,213		$                3,213
4	210*16.5-Applied Overhead			$                3,465		$                               -3,465
5	Actual Overhead	$    -3,700				$                                 3,700
6	1210*5.90			$               -7,139	$                   7,139
7		$    -1,100						$                   -1,100
8a		$    10,500						$                  10,500
8b	(380*6.1)+(830*5.90)				$                  -7,215			$                   -7,215
9	3700-3465					$                                  -235		$                      -235
Total		$      4,957	$                                 360	$                4,159	$                   2,242	$                                       -	$                    3,968	$                    7,750
Requirement -2	Cost of Goods Manufactured
	Workin in Process Inventory, beginning		$                                 850
	Direct materials:
	Direct materials inventory, beginning	$      1,200
	Direct materials purchases	$      2,930
	Cost of direct materials available for use	$      4,130
	Direct materials inventory, ending	$        -360
	Cost of direct materials placed in production	$      3,770
	Direct labor	$      3,213
	Factory overhead Applied	$      3,465
	Total manufacturing costs		$                            10,448
	Total work in process during period		$                            11,298
	Workin in Process Inventory, Ending		$                             -4,159
	Cost of goods manufactured			$                7,139
Requirement -3	Cost of Goods Sold
	Finished Goods Inventory, Beginning	$      2,318
	Add: Cost of Goods Manufactured	$      7,139
	Cost of Goods Available for Sale	$      9,457
	Less: Finished Goods inventory, ending	$    -2,242
	Unadjusted Cost of Goods Sold	$      7,215
	Less: Underapplied Overhead	$         235
	Adjusted Cost of Goods Sold	$      7,450
Requirement -4	Income Statement
	Sales Revenue		$                            10,500
	Less: Cost of Goods Sold		$                              7,450
	Gross Margin		$                              3,050
	Less: Operating Expense		$                              1,100
	Net Income		$                              1,950