Question

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

Raw Materials
Bal. 1/1	24,000	Credits	?
Debits	138,000
Bal. 12/31	34,000

Manufacturing Overhead
Debits	214,640	Credits	?

Work in Process
Bal. 1/1	29,000	Credits	497,000
Direct materials	99,000
Direct labor	177,000
Overhead	233,640
Bal. 12/31	?

Factory Wages Payable
Debits	203,000	Bal. 1/1	13,500
		Credits	198,000
		Bal. 12/31	8,500

Finished Goods
Bal. 1/1	49,000	Credits	?
Debits	?
Bal. 12/31	73,500

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 $10,250 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Answer 1

1) Cost of raw material used = 24000+138000-34000 = 128000

2) Indirect material = 128000-99000 = 29000

3) Indirect labour = 198000-177000 = 21000

4) Cost of goods manufactured = 497000

5) Unadjusted cost of goods sold = 49000+497000-73500 = 472500

6) Overhead rate = 233640*100/177000 = 132% of direct labour cost

7) Actual overhead = 214640

Applied overhead = 233640

Over applied overhead = 233640-214640 = 19000

8) Ending balance in work in process = 29000+99000+177000+233640-497000 = 41640

Direct labour = 10250

Overhead = 10250*132% = 13530

Direct material = 41640-10250-13530 = 17860