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

Question

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

Required:

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 $10,000 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Raw Materials Bal. 1/1 23,000 Credits ? Debits 136,000 Bal. 12/31 33,000

Explanation / Answer

5). Cost of Goods Sold :-

6) Predetermined Overhead Rate :-

= Estimated Total Manufacturing Overhead Cost / Direct Labor Cost

= $222720 / $174000

= 1.28 or 128% of direct labor Cost

7) Manufacturing Overhead Over/under Applied :-

= Actual Manufacturing Overhead Cost - Manufacturing Overhead Applied

= $204720 - $222720

= ($18000)

8) Ending Balance of WIP :-

= $28000 + $98000 + $174000 + $22720 - $494000

= $28720

Manufacturing Overhead Cost = $10000 * 128%

= $12800

Direct Material Cost = Total Cost - Direct Labor Cost - Manufacturing Overhead Cost

= $28720 - $10000 - $12800

= $5920

Particulars Amount($) Beginning Finished goods Inventory 48000 Add: Cost of Goods Manufactured 494000 Cost of Goods Available for sale 542000 Less: Ending Finished goods Inventory (72000) Cost of Goods Sold 470000

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