Problem set
Running head: GROUP CASE 1 1
GROUP CASE 1 2
a. Schedule of Cost of Goods Manufactured
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Direct Materials - |
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Begining materials inventory |
$26,000 |
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Add: Purchases of Raw materials |
50,000 |
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Raw materials available for use |
76,000 |
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Deduct: Ending raw materials inventory |
35,000 |
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Raw materials used in production |
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$41,000 |
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Direct Labor |
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23,000 |
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Manufacturing Overhead |
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59,000 |
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Total Manufacturing Costs |
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123,000 |
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Add: Begining work in process inventory |
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18,000 |
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141,000 |
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Deduct: Ending work in process inventory |
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22,000 |
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Cost of goods manufactured |
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$119,000 |
Part A:
b. Income Statement
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Sales |
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$22,000 |
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Cost of goods sold |
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Begining finished goods inventory |
$42,000 |
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Add: Cost of Goods Manufactured |
119,000 |
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Goods Available for Sale |
161,000 |
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Deduct: Ending finished goods inventory |
29,000 |
132,000 |
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Gross Margin |
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88,000 |
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Selling and Administrative Expenses: |
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Selling Expenses |
18,000 |
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Administrative Expenses |
43,000 |
61,000 |
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Net Operating Income |
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$27,000 |
Part B:
a. Predetermined overhead rates will be 1,710,000/ 95,000 = 18/ machine hour.
Overhead applied will be 75,000*18 = 1,350,000.
Overhead under applied will be 1,687,500 – 1,350,000 = 337,500.
b. Cost of Goods Sold (COGS) allocated to the amount of under applied overheads if the allocation is full is in the COGS will be 337,500. COGS allocated to the amount of under applied overheads if the allocation is full is in the right accounts will be 337,500*759,375/ 1,350,000 = 189,843.75 and this means the difference in the net income will be 337,500 – 189,843.75 = 147,656.25.
Part C:
a. Materials Conversion
Transferred to next department 22,200 22,200.
Ending work in process:
Materials: 1,000 units × 80% 800
Conversion: 1,000 units × 60% 600
Equivalent units of production 23,000 22,800
b. Materials Conversion
Work in process, beginning $ 8,400 $ 7,200
Cost added during the month 97,400 129,600
Total cost (a) $105,800 $136,800
Equivalent units (above) (b) 23,000 22,800
Cost per equivalent unit (a) ÷ (b) $4.60 $6.00
c. Materials Conversion Total
Units transferred out 22,200 22,200
Cost per equivalent unit $4.60 $6.00
Cost transferred out $102,120 $133,200 $235,320
d. Materials Conversion Total
Equivalent units of production:
ending work in process 800 600
Cost per equivalent unit $4.60 $6.00
Cost of ending work in process $3,680 $3,600 $7,280
Part D:
Cost of ending work in progress inventory:
(No. of equivalent units * cost per equivalent unit)
= (330 * 9.5) +(264 * 20.40)
= 3135 +5385.60
= 8520.60
Cost of ending work in progress inventory = $ 8520.60
Cost of units transferred out:
Beginning inventory cost= $1920
Beginning inventory equivalent unit= (360 * 9.5) +(140 * 20.4) = $ 6276
Equivalent unit cost = 9.5+20.4 = $29.9
Units started can completed= $3130
cost of units transferred out=1920+6276+ (3130 * 29.9)
= 1920+6276+93587
cost of units transferred out =$101,783
Part E:
A. Predetermined rate = 1464480 -24000=61.02 per DLH
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H16Z |
p25p |
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Direct labor hours |
.4 |
1.2 |
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Predetermined cost overhead per DLH |
61.02 |
61.02 |
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Manufacturing cost overhead per unit |
24.41 |
73.22 |
B.
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Estimated overhead costs |
Total expected activity |
Activity rate |
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Supporting Direct labor |
5,52,000 |
24000 |
23 |
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Setting up machines |
1,32,48 |
1104 |
120 |
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Parts administration |
780000 |
1560 |
500 |
Overhead cost:
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H16Z |
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P25P |
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Activity |
Rate |
ABC cost |
activity |
Rate |
Cost |
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Supporting direct labor |
12000 |
23 |
276000 |
12000 |
23 |
276000 |
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Setting up machines |
864 |
120 |
103680 |
240 |
120 |
28800 |
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Parts administration |
600 |
500 |
300000 |
60 |
500 |
480000 |
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Total cost |
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679680 |
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Annual production |
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30000 |
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Manufacturing overhead cost per unit |
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22.66 |
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