Moreno Manufacturing Corporation was started with the issuance of common stock f
ID: 2479142 • Letter: M
Question
Moreno Manufacturing Corporation was started with the issuance of common stock for $60,000. It purchased $7,200 of raw materials and worked on three job orders during 2015 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.)
Direct Raw Materials Used Direct Labor
Job 1 $ 1,200 $ 2,100
Job 2 1,900 3,900
Job 3 3,300 1,900
Total $ 6,400 $ 7,900
Factory overhead is applied using a predetermined overhead rate of $0.50 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $10,250 cash. Moreno paid $300 for selling and administrative expenses. Actual factory overhead was $4,350.
Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2015.
Explanation / Answer
Job1
Job2
Job3
Total
Direct raw material
1200
1900
3300
6400
Direct labour
2100
3900
1900
7900
Factory overhead (0.50 per direct labour $)
1050
1950
950
3950
Total manufacturing cost
4350
7750
6150
18250
Selling and admin
300
300
cost of goods sold
6450
6450
Income/exp
sales price
10250
Cost of goods sold
-6450
Income/exp
3800
Balancesheet
common stock
60000
Retained earning
3800
63800
Cash (60000+10250-7200-7900-4350-300)
50500
Finished goods(4350+7750+400)
12500
Raw material stock (7200-6400)
800
63800
Job1
Job2
Job3
Total
Direct raw material
1200
1900
3300
6400
Direct labour
2100
3900
1900
7900
Factory overhead (0.50 per direct labour $)
1050
1950
950
3950
Total manufacturing cost
4350
7750
6150
18250
Selling and admin
300
300
cost of goods sold
6450
6450
Income/exp
sales price
10250
Cost of goods sold
-6450
Income/exp
3800
Balancesheet
common stock
60000
Retained earning
3800
63800
Cash (60000+10250-7200-7900-4350-300)
50500
Finished goods(4350+7750+400)
12500
Raw material stock (7200-6400)
800
63800
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