Question

Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?

a. $200 per change, $64 per setup, $5 per inspection

b. $180 per change, $76 per setup, $4 per inspection

c. $150 per change, $64 per setup, $4 per inspection

d. $180 per change, $76 per setup, $5 per inspection

e. $200 per change, $5 per setup, $64 per inspection

Short Answer

The following costs are attributed to the Quilt Company:

Purchase of raw materials (all direct)

$291,100

Direct labour cost

$141,800

Manufacturing overhead costs

$198,100

Inventories:

Beginning raw materials

$10,000

Ending raw materials

$900

Beginning work in process

$20,000

Ending work in process

$15,900

Beginning finished goods

$20,000

Ending finished goods

$6,800

Quilt Company used a 120% predetermined overhead rate based on direct labour cost.

Required:

7. Calculate the cost of goods manufactured.

8. What was the cost of goods sold before adjusting for any under or over applied overhead?

9. By how much was manufacturing overhead cost under or over applied?

10. Would the summary journal entry to close any under or over applied manufacturing overhead cost be a debit or credit to COGS?

Answer 1

Answers:

7.)

Cost of goods manufactured = $616,260

Explanation:

Schedule of Cost of Goods Manufactured - Quilt Company
Direct Materials:
Beginning raw materials inventory	$                             10,000
Add: Raw materials purchases	$                          2,91,100
Raw materials avilable for use	$                          3,01,100
Less: Ending raw materials inventory	$                                   900
Raw Material used	$                          3,00,200
Direct Labor	$                          1,41,800
Manufacturing Overhead ($141,800 × 120%)	$                          1,70,160
Total Manufacturing Costs	$                          6,12,160
Add: Beginning Work In process	$                             20,000
Total cost of goods in process	$                          6,32,160
Less: Ending work in process inventory	$                             15,900
Cost of goods manufactured	$                          6,16,260

.

8.)

Cost of goods sold = $629,460

Explanation:

Schedule of Cost of Goods Sold - Quilt Company
Beginning Finished Goods inventory	$                             20,000
Add: Cost of goods manufactured (calculated above)	$                          6,16,260
Cost of goods avilable for sale	$                          6,36,260
Less: Ending Finished goods inventory	$                                6,800
Cost of Goods Sold	$                          6,29,460

.

9.

Overhead Under-Applied = $27,940

Explanations:

Overhead applied = $1,70,160

Actual overhead = $198,100

Overhead Under-Applied = Actual overhead - Overhead applied

= $198,100 - $170,160

= $27,940

.

10.)

General Journal	Debit	Credit
Cost of goods sold	$       27,940
Under-applied Overhead		$       27,940

The summary journal entry to close the under applied manufacturing overhead cost be a debit to COGS.