NAME: Normal Costing Review Problem Yuletide Company is a manufacturing firm tha

Question

NAME: Normal Costing Review Problem Yuletide Company is a manufacturing firm that uses normal costing. The company's inventory balances were as follows at the beginning and end of the calendar year 2016. Beginning Balance Direct Materials $14,000 Work in Process $27,000 Finished Goods$62,000 Ending Balance $22,000 $9,000 $77,000 The company applies overhead to jobs using a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated it would work 33,000 machine hours and incur $231,000 in overhead cost. The following information may be useful to you as you complete your tasks. A. Direct Materials purchased during 2016 cost a total of $315,000 B. The following employee costs were incurred: i. Direct Labor $377,000 I i Administrative Salaries 172,000 ii. Sales Salaries $147,000 C. Factory Utility Costs: $10,000 D. Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling and administrative activities. E. Machine Hours: Actual machine hours incurred in 2016 were 35,000 G. Ending Accounts Receivable Balance: $84, 000 H. Ending Prepaid Expenses: $25,000 I. Administrative Expense: $74,000 . Finished Goods Warehousing Expense was $38,000 L. M. Overhead: Assume that any under or over-applied overhead is closed 100% to Cost of Good Sold. Sales for year totaled $1,363,000 Factory Maintenance Costs: $122,000 Tasks for our homework: A. Prepare a Schedule of Cost of Goods Manufactured in Good Form (Remember that means a proper B. Prepare an Income Statement in Good Form as well. heading too!)

Explanation / Answer

Predetermined Over head rate =231000/33000=$7 per hour Statement of Cost of goods manufactured Amount in $ Amount in $ Direct materials used Opening Inventories 14000 Purchases 315000 Available materials 329000 Less: Closing Inventories -22000 307000 Direct labour 377000 Over heads factory Unitility costs 10000 depreciation 120000 manufacturing overhead Absorbed 35000*7 245000 factory maintenance costs 122000 497000 Add: Opening Work in Progress 27000 Less; Closing Work in Progress -9000 Cost of Finished goods manufactured           11,99,000 Income Statement Particulars Amount in $ Amount in $ Sales 1363000 less: cost of goods sold Cost of goods manufactured          11,99,000 Add: Opening Finished Goods 62000 less: Closing Finished goods -77000          11,84,000 Less: over applied Manufactured Over head -14000 (35000-33000)*$7 Cost of goods sold          11,70,000         -11,70,000 gross profit             1,93,000 Less:Selling & Admin Expenses Admin Salaries 172000 Sales Salaries 147000 Depreciation on Selling Activities 7000 Admin Expenses 74000 Ware housing Expenses 38000 -438000 Net income / (Loss)             6,31,000

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

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