ABC company had the following transactions and events during the year ended 31 March 2022. The company uses direct lahor dollars as the allocation base. For the current year, the estimated overhead was $777,000 and estimated direct labor cost was $350,000. Actual costs incurred follows: a. Purchased raw materials on account, $567,000. b. 10% of raw materials purchased was requisitioned as indirect materials. c. Direct labor for production is $320,000, indirect labor is S125,000. d. Some costs for the company and their percentage for factory are shown below, with the remaining percentage for administration costs. Other costs for Total Percentage spent in factory the company Property tax 100,000 90% Utilities 90,000 89% Depreciation 150,000 75% Insurance 180,000 80% Cleaning service fee 85,000 70% Maintenance fee 50,000 90% The bulances of inventory follow: Beginning Ending Raw materials Work-in-process Finished goods $8,000 $25,010 7,500 572,650 25,010 487,810 Required: a) Compute the predetermined overhead rate for the year. b) Compute the amount of underapplied or overapplied overhead for the year. Prepare the adjustment entry for adjusting any underapplied or overapplied overhead to cost of goods sold. c) Prepare a schedule of cost of goods manufactured for the year.
ABC company had the following transactions and events during the year ended 31 March 2022. The company uses direct lahor dollars as the allocation base. For the current year, the estimated overhead was $777,000 and estimated direct labor cost was $350,000. Actual costs incurred follows: a. Purchased raw materials on account, $567,000. b. 10% of raw materials purchased was requisitioned as indirect materials. c. Direct labor for production is $320,000, indirect labor is S125,000. d. Some costs for the company and their percentage for factory are shown below, with the remaining percentage for administration costs. Other costs for Total Percentage spent in factory the company Property tax 100,000 90% Utilities 90,000 89% Depreciation 150,000 75% Insurance 180,000 80% Cleaning service fee 85,000 70% Maintenance fee 50,000 90% The bulances of inventory follow: Beginning Ending Raw materials Work-in-process Finished goods $8,000 $25,010 7,500 572,650 25,010 487,810 Required: a) Compute the predetermined overhead rate for the year. b) Compute the amount of underapplied or overapplied overhead for the year. Prepare the adjustment entry for adjusting any underapplied or overapplied overhead to cost of goods sold. c) Prepare a schedule of cost of goods manufactured for the year.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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