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:

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 $8,250 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?

Explanation / Answer

Raw Materials Bal. 1/1 16,000 Credits 112000 (16000+122000-26000) Debits 1,22,000 Bal. 12/31 26,000 Manufacturing Overhead Debits 2,33,800 Credits 244800 (WIP overheads) Work in Process Bal. 1/1 21,000 Credits 4,73,000 Direct materials 91,000 Direct labor 1,53,000 Overhead 2,44,800 Bal. 12/31 36,800 Factory Wages Payable Debits 1,87,000 Bal. 1/1 9,500 Credits 1,82,000 Bal. 12/31 4,500 Finished Goods Bal. 1/1 41,000 Credits 4,52,500 Debits 4,73,000 Bal. 12/31 61,500 Cost of Goods Sold Debits 4,52,500 Material used 112000 (16000+122000-26000) Material used 112000 Part 1 Direct material 91000 Indirect material 21000 part 2 (112000-91000) Factory wages 182000 Direct labor 153000 Indirect labor 29000 Part 3 (182000-153000) Cost of goods manufactured 473000 Part 4 Cost of goods sold 4,52,500 part 5 (41000+473000-61500) Overheads applied 244800 Direct labor cost 153000 Predetermined overhead rate 1.6 Part 6 (244800/153000) Overheads applied 244800 Actual overheads 233800 Overapplied 11000 part7 Work in progress ending 36800 Part 8 Direct material 8250 Direct labor 10981 Overheads 17569

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