Heart manufacturing company makes specialty tols. In January, Heart incurs manuf

Question

Heart manufacturing company makes specialty tols. In January, Heart incurs manufacturing costs of $10,000,000 for direct materials, direct labors, and overhead. 20% of the total costs represents overhead applied. The overhead rate is $1 for every $2 of direct labor costs incurred. Inventory balances were:

Jan 1 Jan31

Raw materials $300,000 $ 500,000

Work in process $600,000 $400,000

Finished Goods $400,000 $200,000

At the end of January, there was $1,000 of overapplied overhead.

Instructions:

(a) Determine the ocst of raw materials purchased in Januray

(b) Prepare a cost of goods manyfactyred schedule for January 2012.

(c) Compute the cost of goods sold for Janurary.

Explanation / Answer

Heart Manufacturing Manufacturing costs Jan Details Amt $ Total Manufacturing Cost         10,000,000 Overhead Applied @20% of cost            2,000,000 Direct Labor cost @2:1 of OH            4,000,000 Direct Materials issued $            4,000,000 Inventory details Opening Jan 1. Purchase Jan Issued jan 1. Closing Jan 31. Jan Raw Materials               300,000 4,200,000      4,000,000        500,000 a Raw material purchase in January $       4,200,000 b COGM Schedule Jan Details Amt$ Opening WIP               600,000 Add Direct Materials issued            4,000,000 Add Direct Labor cost            4,000,000 Add Overhead Applied            2,000,000 Less: Closing WIP               400,000 Total COGM $     10,200,000 c COGS for Jan Details Amt$ Opening stock Finished Goods               400,000 Add Manufacture of FG in Jan         10,200,000 Less : Credit for Overapplied Overhead                    1,000 Less : Closing Stock Finished Goods               200,000 Cost of Goods Sold in January $     10,399,000

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.