Question

Maryville, Inc., incurred the following costs during August: Raw materials used $ 32,900 Direct labor 78,600...

Maryville, Inc., incurred the following costs during August:

Raw materials used $ 32,900
Direct labor 78,600
Manufacturing overhead, actual 45,300
Selling expenses 29,330
Administrative expenses 15,870
Interest expense 9,600


During the month, 5,600 units of product were manufactured and 4,700 units of product were sold. On August 1, Maryville, Inc., carried no inventories. On August 31, there were no inventories other than finished goods.

Required:

a. Calculate the cost of goods manufactured during August and the average cost per unit of product manufactured.
Cost of goods manufactured
Average cost per unit

b. Calculate the cost of goods sold during August.

c-1. Calculate the difference between cost of goods manufactured and cost of goods sold.

c-2. How will this amount be reported in the financial statements?

Finished goods inventory
Work in progress inventory

Raw materials inventory

d. Prepare a traditional (absorption) income statement for Maryville, Inc., for the month of August . Assume that sales for the month were $299,257 and the company's effective income tax rate was 30%.
MARYVILLE, INC.
Absorption Income Statement
For the month of August

2)

Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $14 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 45,700 units for the year, which will require 219,000 direct labor hours:

Activity Cost Driver Budgeted Costs for 2016 Cost Driver Used as Allocation Base Cost Allocation Rate
Materials handling $ 48,180 Number of parts used $ 0.22 per part
Cutting and lathe work 2,163,720 Number of parts used 9.88 per part
Assembly and inspection 4,511,400 Direct labor hours 20.60 per hour

The following production, costs, and activities occurred during the month of July:

Units Produced Direct Materials Costs Number of Parts Used Direct Labor Hours
3,380 $101,500 2,677 13,500

a. Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "Cost per unit produced" to 2 decimal places.)
Total manufacturing cost
Cost per unit produced

b. Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2016.) (Round "Cost per unit produced" to 2 decimal places.
Total manufacturing cost
Cost per unit produced

c. Which approach do you think provides better information for manufacturing managers?

Activity based costing
Direct labor hours basis
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