Discussion module 3 MC

PROBLEM 3-59 (55 MINUTES)

The answers to the questions are as follows: 1. $216,000 6. $60,000 2. $19,000 7. $150,000 3. $70,000 8. $40,000 4. $38,000 9. $15,000 5. $80,000 10. Zero The completed T accounts, along with supporting calculations, follow.

Raw-Material Inventory Accounts Payable

Bal. 10/31 15,000 12,000 Bal. 10/31 70,000 40,000 81,000 70,000 Bal. 11/30 45,000 1,000 Bal. 11/30

Work-in-Process Inventory Finished-Goods Inventory

Bal. 10/31 8,000 Bal. 10/31 35,000 Direct 150,000 150,000 180,000 material 40,000 Bal. 11/30 5,000 Direct labor 80,000 Cost of Goods Sold

Overhead 60,000 180,000 Bal. 11/30 38,000

Manufacturing Overhead Sales Revenue

60,000 60,000 216,000

Wages Payable Accounts Receivable

1,000 Bal. 10/31 Bal. 10/31 8,000 79,500 80,000 216,000 205,000 1,500 Bal. 11/30 Bal. 11/30 19,000 Supporting Calculations: 1. Sales revenue = cost of goods sold120%

= $180,000120%

= $216,000

PROBLEM 3-59 (CONTINUED) 2. Ending balance in accounts receivable = beginning balance + sales revenue

– collections

= $8,000 + $216,000 – $205,000

= $19,000

3. Purchases of raw material = addition to accounts payable Addition to accounts payable = ending balance + payments

– beginning balance

= $1,000 + $81,000 – $12,000

= $70,000

4. November 30 balance in work- in-process inventory

= direct

material +

direct labor

+ manufacturing overhead

= $20,500 + (500)($20) + (500)($15*)

= $38,000

*Predetermined overhead rate =

† hours labor-direct budgeted

overhead budgeted

=

48,000

$720,000

= $15 per direct-labor hour

†Budgeted direct-labor hours = rate labor-direct

cost labor-direct budgeted  48,000

$20

$960,000 

5. Addition to work in process for direct labor

= November credit to wages payable

November credit to wages payable

= ending balance + payments – beginning balance

= $1,500 + $79,500 – $1,000 = $80,000

PROBLEM 3-59 (CONTINUED) 6. November applied overhead = direct labor hourspredetermined overhead rate

= 4,000*$15

= $60,000

Direct labor hours =

rate labor-direct

labordirect for process in work toaddition

= hours 4,000

$20

$80,000 

7.

Cost of goods completed during November

=

beginning balance in

work in process

+ additions

during November

–

ending balance in

work in process

= $8,000 + ($40,000 + $80,000 + $60,000) – $38,000

= $150,000 8. Raw material used in

November = November credit to raw-

material inventory = $40,000 (given)

9. October 31 balance in

raw-material inventory =

November 30 balance in raw-

material inventory

+

direct material

used

–

purchases

= $45,000 + $40,000 – $70,000

= $15,000

10. Overapplied or underapplied overhead = actual overhead – applied overhead

= $60,000 – $60,000

= 0