Answer:
Part a
i. Statement of cost of goods manufactured
Beginning Work In Process $80
Add Manufacturing Cost ;
Direct Materials $326
Direct Labor $225
Applied Overheads ($225 x 60%) $135 $686
Less Ending Work in Process ($30)
Cost of Goods Manufactured $736
ii. Statement of Cost of Goods Manufactured
Opening Finished Inventory $90 (calculated)
Add Cost of Goods Manufactured $736
Goods Available for sale $826
Less Ending Inventory ($110)
Cost of Goods Sold $716
Add under -applied overheads $10
Adjusted Cost of Goods Sold $726
Part b
Debit : Cost of Goods Sold $10
Credit : Overheads $10
Part c
Tink Co.
Income Statement for the year
Sales Revenue $900
Less Cost of Sales ($726)
Gross Profit $174
Less Expenses
Selling & administrative expenses ($30)
Net Income (Loss) $144
Explanation:
At the end of the period compare amount of actual overheads to applied overheads
Since, <em>Actual overheads > Applied overheads, overheads have been under-applied</em>
Under-applied overheads = $145 - $135 = $10
The amount of under-applied overheads is added to cost of goods sold.
Note : The missing figure of Beginning Finished Inventory has been determined using missing figure approach to be $90
