Question

Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Bal. 1/1 29,000 Credits ? Debits 148,000 Bal. 12/31 39,000 Manufacturing Overhead Debits 196,800 Credits ? Work in Process Bal. 1/1 34,000 Credits 512,000 Direct materials 104,000 Direct labor 192,000 Overhead 220,800 Bal. 12/31 ? Factory Wages Payable Debits 213,000 Bal. 1/1 16,000 Credits 208,000 Bal. 12/31 11,000 Finished Goods Bal. 1/1 54,000 Credits ? Debits ? Bal. 12/31 81,000 Cost of Goods Sold Debits ? Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of goods manufactured for the year? 5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer. 6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? 7. Was manufacturing overhead underapplied or overapplied? By how much? 8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $11,500 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

Answer and Explanation:

The computation is shown below:

1) Cost of raw material used is

= $29,000 + $148,000 - $39,000

= $138,000

2) Indirect material is

= $138,000 - $104,000

= $34,000

3) Indirect labour is

= $208,000 - $192,000

= $16,000

4) Cost of goods manufactured is $512,000

5) Unadjusted cost of goods sold is

= $54,000 + $512,000 - $81,000

= $485,000

6) The Overhead rate is

= $220,800 ÷ $192,000

= 115% of labor cost

7) Actual overhead is $196,800

Applied overhead is $220,800

So,

Over applied overhead is

= $220,800 - $196,800

= $24,000

8) Ending balance in work in process is

= $34,000 + $104,000 + $192,000 + $220,800 - $512,000

= $38,800

Direct labor is $11,500

So,

Overhead is

= $11,500 × 115%

= $13,225

So,

Direct material is

= $38,800 - $11,500 - $13,225

= $14,075