Question

The following costs are attributed to the Quilt Company:

Purchase of raw materials (all direct) $297,100

Direct labour cost

Manufacturing overhead costs

Inventories:

Beginning raw materials

Ending raw materials Beginning work in process

Ending work in process

Beginning finished goods

Ending finished goods

S141,800

$175,260

S10,000

$5,000

S20,000

S10,800

S20,000 $4,800

Quilt Company used a 120% predetermined overhead rate based on direct labour cost.

Required:

7. Calculate the cost of goods manufactured.

& What was the cost of goods sold before adjusting for any under or over applied overhead? 9. By how much was manufacturing overhead cost under or

over applied?

10. Would the summary journal entry to close any under or over applied manufacturing overhead cost be a debit or credit to COGS?

Answer 1

Cost of goods manufactured:
Manufacturing cost
Beginning Raw material	10000
Add: Purchase		297100
Total Material available	307100
Less: Ending raw material	-5000
Direct material used			302100
Direct labour cost			141800
Manufacturing oh (141800*120%)	170160
Total Manufacturing cost			614060
Add: Beginning WIP				20000
Total cost of WIP				634060
Less: Ending WIP				-10800
Cost of goods manufactured:			623260
Cost of goods sold (unadjusted)
Beginning FG inventory		20000
Add: cost of goods manufactured	623260
total cost of goods available		643260
Less: ending FG inventory		-4800
Cost of goods sold (unadjusted)		638460
Under/Over-applied Oh
Manufacturing oh incurred		175260
Less: Oh applied			170160
Under/Over-applied Oh		5100
Journal entry
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cost of goods sold			5100
	Manufacturing oh				5100
	(for under-applied oh)