Question

Problem 3-11 T-Account Analysis of Cost Flows [LO3-2, LO3-3, LO3-4]

Selected T-accounts of Moore Company are given below for the just completed year:

Raw Materials
Bal. 1/1	29,000	Credits	?
Debits	148,000
Bal. 12/31	39,000

Manufacturing Overhead
Debits	196,800	Credits	?

Work in Process
Bal. 1/1	34,000	Credits	512,000
Direct materials	104,000
Direct labor	192,000
Overhead	220,800
Bal. 12/31	?

Factory Wages Payable
Debits	213,000	Bal. 1/1	16,000
		Credits	208,000
		Bal. 12/31	11,000

Finished Goods
Bal. 1/1	54,000	Credits	?
Debits	?
Bal. 12/31	81,000

Cost of Goods Sold
Debits	?

Required:

1. What was the cost of raw materials used in production during the year?

2. How much of the materials in (1) above consisted of indirect materials?

3. How much of the factory labor cost for the year consisted of indirect labor?

4. What was the cost of goods manufactured for the year?

5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer.

6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year?

7. Was manufacturing overhead underapplied or overapplied? By how much?

8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $11,500 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

1) Raw material used = 29000+148000-39000 = 138000

2) Indirect material = 138000-104000 = 34000

3) Indirect labor = 208000-192000 = 16000

4) Cost of goods manufactured = 512000

5) Unadjusted cost of goods sold = 54000+512000-81000 = 485000

6) Overhead rate = 220800/192000 = 115% of labor cost

7) Overhead applied = 220800

Actual overhead = 196800

Over applied overhead = 24000

8) Ending WIP = 38800

Direct material = 38800-11500-13225 = 14075

Applied overhead = 11500*1.15 = 13225