Question

The following data pertain to the Marie Manufacturing Company for the year ended December 31, 2004. The company used 51,000 direct labor hours during 2004.

Beginning direct material inventory                           $    42,000
Ending direct material inventory 48,000
Beginning work-in-process inventory 84,000
Ending work-in-process inventory 93,000
Beginning finished goods inventory 124,000
Ending finished goods inventory 133,000
Direct material purchased 850,000
Indirect material used in production 4,000
Factory supplies used 6,200
Depreciation on the factory 60,000
Depreciation on the sales office 4,000
Depreciation on the administrative office 3,000
Sales salaries 120,000
Sales revenue 3,335,000
Assembly-line labor cost 820,000
Factory security guard cost 12,000
Factory supervision 82,600
Depreciation on production equipment 560,000
Depreciation on sales office equipment 22,200

Additional Information:

The overhead is applied using a budgeted rate that is set every December by forecasting the following year's production (in units) and relating it to forecast direct labor hours. The budget for 2004 called for 50,000 direct labor hours and $750,000 of factory overhead.     

• What is the adjusted cost of goods manufactured?

Group of answer choices

$ 815,000

$2,420,000

$ 844,000

$ 40,200

$2,411,000

$2,370,800

Answer 1

WORKSHEET:
COST OF GOODS MANUFACTURED
Work in process inventory, beginning			$         84,000
Direct material cost:
Direct materials inventory, beginning	$         42,000
Raw materials purchased	$      8,50,000
Total materials available	$      8,92,000
Raw materials inventory, ending	$         48,000
Total materials used	$      8,44,000
Indirect materials used	$ 4,000
Cost of DM used		$      8,40,000
Direct labor		$      8,20,000
Factory overhead applied [51000*15]		$      7,65,000
Manufacturing cost for the month			$   24,29,000
Total manufacturing cost			$   25,13,000
Work in process, Ending			$ 93,000
Cost of goods manufactured			$   24,20,000
Finished goods inventory, beginning			$     1,24,000
Cost of goods manufactured			$   24,20,000
Cost of goods available for sale			$   25,44,000
Less: Finished goods inventory, Ending			$     1,33,000
Unadjusted cost of goods sold			$   24,11,000
Less: Overhead overapplied			$ 40,200
Adjusted COGS			$   23,70,800
WORKINGS:
OH predetermined rate = 750000/50000 =	$            15.00	per DLH
Actual Overhead:
Indirect material used in production	$ 4,000
Factory supplies used	$ 6,200
Depreciation on the factory	$         60,000
Factory security guard cost	$         12,000
Factory supervision	$         82,600
Depreciation on production equipment	$      5,60,000
Actual overhead	$      7,24,800
Overhead applied	$      7,65,000
Overhead over applied [765000-724800]	$         40,200
INCOME SUMMARY
Sales		$   33,35,000
COGS		$   23,70,800
Gross profit		$ 9,64,200
Operating expenses:
Depreciation on sales office	$ 4,000
Depreciation on administrative office	$ 3,000
Sales salaries	$      1,20,000
Depreciation on sales office equipment	$         22,200	$      1,49,200
Net income		$      8,15,000
ANSWER:
The requirement asks for Adjusted cost of goods manufactured.
Normaly it is adjusted cost of goods sold.
The options given are:
$815000-Net income
$2420000-which is cost of goods manufactured
$844000-which is Cost of materials used [including indirect materials]
$40200-which is overapplied overhead
$2411000-which is unadjusted cost of goods sold
$2370800-which is adjusted cost of goods sold