Widgets, Inc. has provided the following data for 2014... A) Calculate the raw m

Question

Widgets, Inc. has provided the following data for 2014...

A) Calculate the raw materials used in production.

B) Calculate the manufacturing overhead applied for the year.

C) Calculate the toal manufacturing costs for the year, assuming that all raw materials used are direct materials.

D) Calculate the cost of goods manufactured for the year.

E) Calculate the unadjusted cost of goods sold for the year

F) Calculate the amount of underapplied or overapplied overhead for the year.

G) Calculate the adjusted costs of goods sold after adjusting for the over/underapplied overhead

H) Based on the above information, prepare T-accounts for the following accounts:

1) Raw Materials

2) Work in Progress

3) Finished Goods

4) Cost of goods sold

5) Manufacturing overhead

-----SHOW ALL WORK-----

RAW MATERIALS WORK IN PROGRESS FINISHED GOODS Beginning Inventory $ 48,000 $ 63,000 $ 98,000 Ending Inventory $ 36,000 $ 81,000 $ 104,000

Explanation / Answer

$372,000

$372,000

A. Raw material used in production is calculated as under: Beginning Raw material inventory $48,000 Purchases during the year $360,000 Less: Ending Raw material inventory ($36,000) Raw material used in production $372,000 B. The manufacturing overhead applied for the year is calcualted as under: Estimated manufacturing overhead for the year $1,000,000 Est. Total direct labor hours                                 10,000 Absorption rate for manufacturing overhead $100 Actual Total direct labor hours taken 9,500 Manufacturing overhead applied $ 950,000 The manufacturing overhead applied for the year is $950,000. C. Total manufacturing costs for the year calculated as under: Direct material

$372,000

Direct labor $ 940,000 Manufacturing overhead applied $ 950,000 Total manufacturing costs $2,262,000 D. Total cost of goods manufacturing during the year is as under: Beginning WIP Inventory $63,000 Cost of goods transferred to WIP $ 2,262,000 Less: Ending WIP Inventory ($81,000) Cost of goods manufactured during the year $2,244,000 E. The unadjusted cost of goods sold during the year is as under: Beginning cost of finished goods inventory $98,000 Cost of goods manufactured during the year $2,244,000 Less: Ending cost of finished goods inventory ($104,000) Unadjusted cost of goods sold during the year $2,238,000 F. The difference between manufacturing overhead applied during the year and actual manufacturing overhead cost incurred is under/over applied manufacturing overhead transferred to cost of goods sold. Manufacturing overhead applied $ 950,000 Less: Actual manufacturing ovehead incurred $ (1,050,000) Under applied manufacturing overhead $ (100,000) The actual cost of manufacturing overhead is more than the manufacturing overhead applied therefore the difference is reported as under applied manufacturing overhead. G. Adjusted cost of goods sold is the sum of unadjusted cost of goods sold and under applied manufacturing overhead cost. Unadjusted cost of goods sold during the year $2,238,000 Under applied manufacturing overhead $ 100,000 Adjusted cost of goods sold $2,338,000 H. The T Accounts for Raw materials, WIP, Finished goods, Cost of goods sold and manufacturing ovehead are as under: Raw Material Beginning Inventory $ 48,000 WIP

$372,000

Purchases $ 360,000 Ending Inventory $ 36,000 Total $ 408,000 Total $ 408,000 WIP Inventory Beginning Inventory $ 63,000 WIP $2,232,000 Raw Material $ 360,000 Ending Inventory $ 81,000 Direct labor $ 940,000 Manufacturing overhead applied $ 950,000 Total $ 2,313,000 Total $ 2,313,000 Finished Goods Inventory Beginning Inventory $ 98,000 Cost of goods sold $2,226,000 WIP Inventory $ 2,232,000 Ending Inventory $ 104,000 Total $ 2,330,000 Total $ 2,330,000 Cost of Goods sold Finsihed Goods Inventory $ 2,226,000 Tranferred to Profit and loss statement $ 2,326,000 Under applied Manufacturing overhead $ 100,000 Total $ 2,326,000 Total $ 2,326,000 Manufacturing Overhead Cash $           1,050,000 WIP $ 950,000 Cost of goods sold $ 100,000 Total $           1,050,000 Total $1,050,000

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