Question

a) The company purchased marine propellers and metal tubing for $11,040 on account.

b) A requisition was filed by the Gauge Department supervisor for 280 pounds of clear plastic. The material cost 70¢ per pound when it was purchased.

c) The Motor Testing Department supervisor requisitioned 320 feet of electrical wire, which is considered an indirect material. The wire cost 10¢ per foot when it was purchased.

d) An electric utility bill of $100 was paid in cash. Of the total bill, 25% is related to the company’s sales office located adjacent to the plant.

e) Labor costs incurred during May totaled $92,500. This amount includes $19,000 of indirect labor costs. Of the total labor costs, $75,000 were paid in cash and the remainder remained unpaid at the end of the month.

f) Depreciation on equipment for May totaled $8,500.

g) Job number G22, consisting of 60 tachometers, was finished during May. The total cost of the job was $1,200.

h) During May, 6,500 machine hours were used.

i) Assume actual manufacturing overhead costs totaled $141,000, including amounts recorded in items

(a) – (h). The company closed underallocated or overallocated manufacturing overhead. ACCT 201 | MANAGERIAL ACCOUNTING I FINAL EXAM | PAGE 4 j) Sales in May amounted to $181,000, all of which was on account. Cost of goods sold in May totaled $142,500.

3. Of these amounts, what is the total amount that would appear on Job Cost Records during the month of May?

4. Prepare Seaway’s traditional income statement for the month of May. Assume period costs other than the ones included in (a) – (j) total $5,000.

Answer 1

Part 3

Direct material (208 pounds * 0.70)	196
Direct labor (92500-19000)	73500
Manufacturing overhead (6500*22)	143000
Total amount	216696

Therefore,

Total amount that would appear on Job Cost Records during the month of May = $216696

Part 4

Seaway’s traditional income statement

for the month of May

Sales	181,000
Less: cost of goods sold	140500
Gross profit	40500
Less: operating expenses	5025
Operating income	35475

Overapplied manufacturing overhead = applied overhead – actual overhead = 143000-141000 = 2000

Cost of goods sold = 142500-2000(overapplied overhead) = 140500

Operating expenses = 5000+25 (electric utility bill) = 5025