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In: Accounting

Problem 3-11 T-Account Analysis of Cost Flows [LO3-2, LO3-3, LO3-4] Selected T-accounts of Moore Company are...

Problem 3-11 T-Account Analysis of Cost Flows [LO3-2, LO3-3, LO3-4]

Selected T-accounts of Moore Company are given below for the just completed year:

Raw Materials
Bal. 1/1 23,000 Credits ?
Debits 136,000
Bal. 12/31 33,000
Manufacturing Overhead
Debits 204,720 Credits ?
Work in Process
Bal. 1/1 28,000 Credits 494,000
Direct materials 98,000
Direct labor 174,000
Overhead 222,720
Bal. 12/31 ?
Factory Wages Payable
Debits 201,000 Bal. 1/1 13,000
Credits 196,000
Bal. 12/31 8,000
Finished Goods
Bal. 1/1 48,000 Credits ?
Debits ?
Bal. 12/31 72,000
Cost of Goods Sold
Debits ?

Required:

8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $10,000 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Solutions

Expert Solution

8 Work in process ending balance:
$ $
Bal. 1/1 28000
Direct materials 98000
Direct labor 174000
Overhead 222720 522720
Less: Credits 494000
Bal.12/31 28720
Ending balance of work in process=$ 28720
Break up:
Direct labor=$10000
Let's assume that factory overhead is allocated based on direct labor cost
Look into work in process T-account
Predetermined overhead rate=Overhead/Direct labor cost=222720/174000=$1.28 per direct labor cost
Hence,Overhead in work in process ending balance=$10000*1.28=$12800
Balance will be direct material
Direct material=28720-10000-12800=$5920
Summary
Work in process ending inventory
$
Direct materials 5920
Direct labor 10000
Overhead 12800
Total 28720

ekkarill92 answered 8 months ago
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