1. BenCo makes and sells pots. the manufacturing process has two stage : Fabrica
ID: 2424196 • Letter: 1
Question
1. BenCo makes and sells pots. the manufacturing process has two stage : Fabrication and Painting. The pots are fabricated in one building and then transferred to painting shed to the finished. When the paint has cured, the pots are transferred to the finished pot showroom.
manufacturing overhead is applied to the Fabrication area based on DL Hours incurred in the paint area.
expected paint DL Hours for January 2016-220 DL hours.
Expected paint overhead- $4620
Beginning and ending inventory balance for January
materials inventory fabrication WIP Painting WIP Finished pots inventory
1/1/16 $5000 $1000 $2000 $3000
1/31/16 $4000 $2000 $1000 $5000
During January of 2016:
BenCo purchased $30,000 of materials
Incurred $11,000 of direct labor( 550 DL Hours@ $20 per DL Hours) in the fabrication area
Incurred $5000 ( 200 DL Hours @ $25 per DL Hours) in the paint area
incurred manufacturing overhead in the fabrication area totaling $24,000
incurred manufacturing overhead in the paint area totaling $4000
Required
a. what is cost of goods manufactured for January 2016?
b. what is cost of goods sold for January 2016 before closing any over/under applied overhead to COGS?
c. what is COGS if any over/under applied overhead is closed to COGS?
Explanation / Answer
Answer a
Particulars
Details
Total
Details
Total
Material cost
5000+30000-4000
31000
5000+30000-4000
5000+30000-4000
Direct Labour
16000
16000
E16+E17
E15
Fabrication
11000
11000
Painting
5000
5000
Manufacturing overhead
28000
28000
E19+E20
E18
Fabrication
24000
24000
Painting
4000
4000
WIP cost
0
0
0
E21
Fabrication
1000-2000=-1000
1000-2000-1000
Painting
2000-1000=1000
2000-10001000
Cost of goods manufactured
75000
SUM(F14:F23)
Answer b
Particulars
Details
Total
Details
Total
Material cost
5000+30000-4000
31000
5000+30000-4000
5000+30000-4000
Direct Labour
16000
16000
E30+E31
E29
Fabrication
11000
11000
Painting
5000
5000
Manufacturing overhead
28200
28200
E33+E34
E32
Fabrication
24000
24000
Painting (4620/220)*200
4200
4200
WIP cost
0
0
0
E35
Fabrication
1000-2000=-1000
1000-2000-1000
Painting
2000-1000=1000
2000-10001000
Cost of goods manufactured
75200
SUM(F28:F37)
Opening finished goods
3000
3000
Closing finished goods
-5000
-5000
COGS
73200
F38+F39+F40
Answer c
Particulars
Details
Total
Details
Total
Material cost
5000+30000-4000
31000
5000+30000-4000
5000+30000-4000
Direct Labour
16000
16000
E47+E48
E46
Fabrication
11000
11000
Painting
5000
5000
Manufacturing overhead
28200
28200
E50+E51
E49
Fabrication
24000
24000
Painting (4620/220)*200
4200
4200
WIP cost
0
0
0
E52
Fabrication
1000-2000=-1000
1000-2000-1000
Painting
2000-1000=1000
2000-10001000
Cost of goods manufactured
75200
SUM(F45:F54)
Opening finished goods
3000
3000
Closing finished goods
-5000
-5000
COGS
73200
F55+F56+F57
Overhead Overapplied
200
-200
4200-4000
-200
COGS
73000
F58+F59
Answer a
Particulars
Details
Total
Details
Total
Material cost
5000+30000-4000
31000
5000+30000-4000
5000+30000-4000
Direct Labour
16000
16000
E16+E17
E15
Fabrication
11000
11000
Painting
5000
5000
Manufacturing overhead
28000
28000
E19+E20
E18
Fabrication
24000
24000
Painting
4000
4000
WIP cost
0
0
0
E21
Fabrication
1000-2000=-1000
1000-2000-1000
Painting
2000-1000=1000
2000-10001000
Cost of goods manufactured
75000
SUM(F14:F23)
Answer b
Particulars
Details
Total
Details
Total
Material cost
5000+30000-4000
31000
5000+30000-4000
5000+30000-4000
Direct Labour
16000
16000
E30+E31
E29
Fabrication
11000
11000
Painting
5000
5000
Manufacturing overhead
28200
28200
E33+E34
E32
Fabrication
24000
24000
Painting (4620/220)*200
4200
4200
WIP cost
0
0
0
E35
Fabrication
1000-2000=-1000
1000-2000-1000
Painting
2000-1000=1000
2000-10001000
Cost of goods manufactured
75200
SUM(F28:F37)
Opening finished goods
3000
3000
Closing finished goods
-5000
-5000
COGS
73200
F38+F39+F40
Answer c
Particulars
Details
Total
Details
Total
Material cost
5000+30000-4000
31000
5000+30000-4000
5000+30000-4000
Direct Labour
16000
16000
E47+E48
E46
Fabrication
11000
11000
Painting
5000
5000
Manufacturing overhead
28200
28200
E50+E51
E49
Fabrication
24000
24000
Painting (4620/220)*200
4200
4200
WIP cost
0
0
0
E52
Fabrication
1000-2000=-1000
1000-2000-1000
Painting
2000-1000=1000
2000-10001000
Cost of goods manufactured
75200
SUM(F45:F54)
Opening finished goods
3000
3000
Closing finished goods
-5000
-5000
COGS
73200
F55+F56+F57
Overhead Overapplied
200
-200
4200-4000
-200
COGS
73000
F58+F59
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