Question

In: Accounting

Angry? Birds, Inc. designs and builds retaining walls for individual customers. On August? 1, 2 jobs...

Angry? Birds, Inc. designs and builds retaining walls for individual customers. On August? 1, 2 jobs were in?process: Level 1 with a beginning balance of? $12,000 and Level 2 with a beginning balance of? $8,600. During? August, Level 3 and Level 4 were started. Levels 1 and 2 were sold at cost plus

40?%

during August. All other jobs remained in process at month end.

The company applies manufacturing overhead at a rate of

?$99

per direct labor hour. Direct labor wages average

?$1212

per hour. The following additional cost information is available for? August:

Level 1

Level 2

Level 3

Level 4

Direct Materials

?$1,200

?$8,000

?$2,100

?$3,000

Direct Labor

?$1,800

?$4,800

?$360

?$1,200

The sales staff is paid a? 2% commission on all sales for the period. Calculate the following given actual MOH of? $8,200 incurred during August.

The gross profit reported on the Income Statement for August equals

?$________.

? (enter commas where appropriate and round to nearest dollar i.e.? 1,000 not? 1000.2)

The ending work in process balance reported on the Balance Sheet for August equals

?$________.

? (enter commas where appropriate and round to nearest dollar i.e.? 1,000 not? 1000.2)

Solutions

Expert Solution

Gross profit for August: $14,460

Sales revenue ($22,890 + $35,000)        57,890
Cost of goods sold ($16,350 + $25,000)        41,350
Add: MOH underapplied           2,080
Adjusted cost of goods sold        43,430
Gross profit $        14,460

Ending work in process balance: $7,830

Level 3           2,730
Level 4           5,100
Ending work in process $           7,830

Working:

Level 1 Level 2 Level 3 Level 4
Direct labor $ 1,800 4,800 360 1,200
Direct labor rate per hour $ 12 12 12 12
Direct labor hours 150 400 30 100
MOH applied @ $9 1,350 3,600 270 900
Level 1 Level 2 Level 3 Level 4
Beginning balance $ 12,000 8,600 0 0
Cost incurred during August:
Direct materials 1,200 8,000 2,100 3,000
Direct labor 1,800 4,800 360 1,200
MOH applied 1,350 3,600 270 900
Total cost $ 16,350 25,000 2,730 5,100
Mark-up @ 40% 6,540 10,000
Sales price 22,890 35,000
MOH incurred $ 8,200
MOH applied 6,120
MOH underapplied $ 2,080

ekkarill92 answered 2 years ago
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