Question

1.Bonita Industries's accounting records reflect the following inventories:

	Dec. 31, 2020		Dec. 31, 2019
Raw materials inventory	$310000		$260000
Work in process inventory	300000		160000
Finished goods inventory	190000		150000

During 2020, $1060000 of raw materials were purchased, direct labor costs amounted to $668000, and manufacturing overhead incurred was $768000.

If Bonita Industries's cost of goods manufactured for 2020 amounted to $2306000, its cost of goods sold for the year is

$2346000.

$2166000.

$2416000.

$2266000.

2. During 2019, Oriole Company expected Job No. 26 to cost $300000 of overhead, $500000 of materials, and $200000 in labor. Oriole applied overhead based on direct labor cost. Actual production required an overhead cost of $220000, $480000 in materials used, and $150000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

$1000000

$850000

$930000

$855000

Answer 1

Answer:
1)
Particulars	Amount (in $ )
Cost of goods Manufactured	$ 2,306,000
Add: Finished goods 1/1/ 2020	$ 150,000
Less: Finished goods 31/12/ 2020	( $ 190,000)
Cost of Goods Sold	$ 2,266,000
Option (d) is Correct
2)
Predetermined Overhead rate    = Expected Overhead Costs / Labor Cost    =   $ 300,000 / $ 200,000	$ 1.50
Particulars	Amount (in $ )
Direct Materials Used	$ 480,000
Direct Labor	$ 150,000
Manufacturing Overhead Costs ( $ 1.50 x $ 150,000)	$ 225,000
Amount transferred to Finished Goods	$ 855,000
Option (d) is Correct