Question

In: Accounting

Malty is a national company whose office facilities were ravaged by fire on July 15, 2017....

Malty is a national company whose office facilities were ravaged by fire on July 15, 2017. The following information was retrieved from the remaining (singed) accounting documents. Malty's uses normal job-order costing and its fiscal year-end is September 30.

Sept 30, 2016 July 15, 2017
Supplies inventory (direct and indirect materials) $ 130,000 $  113,000   
Work in process inventory     196,000          ?
Finished goods inventory       37,000      42,000
Cost of goods sold     632,000          ?
Accounts payable for supplies purchased     26,000       17,000
Manufacturing overhead incurred       31,500       27,200
Manufacturing overhead applied     34,200          ?
Other information (Oct 1/16 to July 15/17):
Cash payments to suppliers       92,000
Payroll (including $10,300 indirect)       96,600
Indirect materials used         7,800
Over-applied overhead            700

Answer the following questions:

(a) What is the value of supplies purchased in the 9 1/2 month period ended July 15, 2017?

What is the value of direct materials used in the 9 1/2 month period ended July 15, 2017?

(b) What is the value of direct labour incurred in the 9 1/2 month period ended July 15, 2017?

(c) What is the manufacturing overhead applied in the 9 1/2 month period ended July 15, 2017?

(d) By how much was the manufacturing overhead over- or under-applied for the year ended Sept 30, 2016? and indicate Over-applied or Under-applied

Please show detailed steps. Thank you.

Solutions

Expert Solution

(a) Value of supplies purchased in the 9 1/2 month period ended July 15, 2017
Accounts payable Ledger a/c ( for supplies purchased)
30-Sep-16 Beginning balance 26000
New purchases(Plug-in figure) 83000
Cash payments to suppliers 92000
15-Jul-17 Ending balance 17000
109000 109000
So, Answer : a = 83000
Value of direct materials used in the 9 1/2 month period ended July 15, 2017
Supplies inventory ledger a/c (direct and indirect materials)
30-Sep-16 Beginning balance 130000
New purchases 83000
Materials used(Plug-in figure) 100000
15-Jul-17 Ending balance 113000
213000 213000
Materials used(as above) 100000
Given: Indirect materials used 7800
So, direct materials used(100000-7800)= 92200
(b) Value of direct labour incurred in the 9 1/2 month period ended July 15, 2017
Payroll (including $10,300 indirect)       96,600
So, direct labor(96600-10300)= 86300
(c) Mfg . overhead applied in the 9 1/2 month period ended July 15, 2017
Manufacturing overhead incurred 27200
Add: Over-applied overhead 700
Mfg. Oh applied (27200+700) 27900
(d) Mfg. overhead over- or under-applied for the year ended Sept 30, 2016
Manufacturing overhead incurred 31500
Manufacturing overhead applied 34200
MFG. OH applied > Mfg. Oh incurred
So, over-applied by
(34200-31500)=
2700
Finished goods inventory
30-Sep-16 Beginning balance(given) 37000
Trf. From WIP 420500
COGS (Plug-in fig.) 415500
15-Jul-17 Ending balance(given) 42000
457500 457500
WIP Inventory
30-Sep-16 Beginning balance(given) 196000
Direct& indirect materials used(92200+7800) 100000
Direct& indirect labor(86300+10300) 96600
Mfg. Oh applied(27200+700) 27900
15-Jul-17 Trf. To fin.gds.Inventory 420500
420500 420500
NOTE: As additional details are missing, WIP fully transferred to Fin.gds.Inventory

ekkarill92 answered 1 year ago
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