Part I Designer Inc. manufactures quality gentlemen\'s clothing. The following s
ID: 2391208 • Letter: P
Question
Part I
Designer Inc. manufactures quality gentlemen's clothing. The following selected financial information for the fiscal year 2017 is provided:
Item
Amount
Sales
$100,000
Cost of Goods Manufactured
75,000
Direct Material Purchased
30,000
Factory Overhead
10,000
Work in Process - January 1
30,000
Work in Process - December 31
15,000
Direct Material - December 31
10,000
Finished Goods Inventory - December 31
60,000
Net Income
15,000
Direct Materials used
30,000
Cost of Goods Sold
55,000
Use this information to prepared a detailed Schedule of Costs of Goods Manufactured for FY 2017: (Round dollar values & enter as whole dollars only.)
Part II
During March 2017, Rain Corporation recorded $17,000 of costs related to factory overhead. Rain's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $18,000 would be incurred, and 10,000 direct labor hours would be worked. During March, 10,200 hours were actually worked. Use this information to determine (round & enter any final dollar answers to the nearest whole dollar):
1. the amount of factory overhead that was applied in March
2. the amount of factory overhead that was over or under applies
3. was the factory overhead was over applied or under applied
Item
Amount
Sales
$100,000
Cost of Goods Manufactured
75,000
Direct Material Purchased
30,000
Factory Overhead
10,000
Work in Process - January 1
30,000
Work in Process - December 31
15,000
Direct Material - December 31
10,000
Finished Goods Inventory - December 31
60,000
Net Income
15,000
Direct Materials used
30,000
Cost of Goods Sold
55,000
Explanation / Answer
Note: Labour cost: Cost of goods manufactured 75000 Add: Ending WIP 15000 Less: Beginning WIP 30000 Currennt cost of material 60000 Less: OH applied 10000 Less: Material incurred 30000 Direct labour cost 20000 Beginning Raw material: Direct material consumed 30000 Add: Ending inventory 10000 Lless: Purchases 30000 Beginning inventory of material 10000 Schedule showing Cost of Goods manufactured: Beginning Inventory of Material 10000 Add: Purchases 30000 Total cost of material availablel for use 40000 Less: Ending Inventory of material 10000 Cost of material consumed 30000 Labour cost 20000 OH applied 10000 Total current cost of manufacturing 60000 Add: Beginning WIP inventory 30000 Cost of goods manufacturing 90000 Less: Ending inventory of WIP 15000 Cost of Goods manufactured 75000 Part-11 Estimated Oh 18000 Divide: Direct labour hours 10000 Pre-dtermined OH rate per DLH 1.8 Overheads applied (10200 DLH @1.80) 18360 Actual OH incurred 17000 Over-applied overheads 1360 Overheads over-applied b y $ 1360
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