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Short Answer

The following costs are attributed to the Quilt Company:

Purchase of raw materials (all direct)	$297,100
Direct labour cost	$141,800
Manufacturing overhead costs	$175,260
Inventories:
Beginning raw materials	$10,000
Ending raw materials	$5,000
Beginning work in process	$20,000
Ending work in process	$10,800
Beginning finished goods	$20,000
Ending finished goods	$4,800

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

Required:

1. Calculate the cost of goods manufactured.
2. What was the cost of goods sold before adjusting for any under or over applied overhead?
3. By how much was manufacturing overhead cost under or over applied?
4. Would the summary journal entry to close any under or over applied manufacturing overhead cost be a debit or credit to COGS?

uestion here

Answer 1

1.)	Beginning raw materials	10,000
	Add: Purchases	297,100
	Less: Ending raw materials	-5,000
	Direct Materials consumed	302,100
	Direct Materials consumed	302,100
	Add: Direct Labor	141,800
	Add: Applied Manufacturing overhead	170,160	=141800*120%
	Total manufacturing cost	614,060
	Add: Beginning work in process	20,000
	Less: Ending work in process	-10,800
	Cost of goods manufactured	$ 623,260
2.)	Cost of goods manufactured	623,260
	Add: Beginning finished goods	20,000
	Less: Ending finished goods	-4,800
	Cost of goods sold before adjusting for any under or over applied overhead	$ 638,460
3.)	Actual Manufacturing overhead cost	175,260
	Less: Applied manufacturing ovehead	-170,160
	Under applied manufacturing overhead	$ 5,100
4.)	Account Tiltes	Debit $	Credit $
	Cost of goods sold	5,100
	Manufacturing overhead		5,100

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