DUE MONDAY 7/2/18 at 12:30 NAME: ACC 203 FS18 EXAM CHAPTERS 14-17 1.(10 Points)
ID: 2394666 • Letter: D
Question
DUE MONDAY 7/2/18 at 12:30 NAME: ACC 203 FS18 EXAM CHAPTERS 14-17 1.(10 Points) Lock Production Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000. (1) If the $28,000 cost of Lock's Work in Process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included? (2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.Explanation / Answer
Solution (1):
Predetermined overhead rate = Estimated factory overhead / Estimated Direct Labor cost
= $231,000 / $154,000 = 150% of direct labor cost
Cost of Work in process inventory = $28,000
Direct Labor cost in WIP inventory cost = $5,200
Factory Overhead in WIP Inventory cost = direct labor cost*150% = $7,800
Direct Material in WIP inventory cost = Cost of Work in process inventory - Direct Labor cost in WIP inventory cost - Factory Overhead in WIP Inventory cost
= $28,000 - $5200 - $7800 = $15,000
Solution 2:
Cost of Finshed goods inventory = $34,300
Direct material in FG inventory = $8,100
Balance cost in FG Inventory = $34300-$8100 = $26,200
$26200 will be Direct labor and Factory Overhead in the ration of 100%:150% respectively.
Therefore, direct Labor In FG inventory = $26200 / 250% *100% = $10,480
Factory Overhead in FG Invetory = $10480 *150% = $15,720
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