Harrison hotels is considering adding a spa to its current facility in order to improve its list of amenities. operating the spa
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Answer:
Raw Material $191,000
Direct labor $300,000
Actual manufacturing overhead $170,000
Actual selling and administrative expenses $115,000
The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost.
1.
Prime Cost = Direct Material + Direct Labor
Prime Cost = $191,000 + $300,000 = 491,000
2.
Cost of goods manufactured $
Direct material $191,000
Add: Direct Labor $300,000
Add: Manufacturing overhead <u>$170,000</u>
Manufacturing cost <u>$661,000</u>
3.
Manufacturing cost $661,000
Add: Work in process inventory at January 1 $235,000
Less: Work in process inventory at January 31 <u>$251,000</u>
Cost of Goods Manufactured <u>$645,000</u>
4.
Cost of Goods Manufactured $645,000
Add: Finished Good inventory at January 1 $125,000
Less: Finished Good inventory at January 31 <u>$117,000</u>
Cost of Goods Sold <u>$653,000</u>
5.
Manufacturing overhead Account Balance
Actual overhead = $175,000
Manufacturing overhead = $180,000 (300,000 x 60% )
Over applied manufacturing overhead = $180,000 - $175,000
Over applied manufacturing overhead = $5,000
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