Concept explainers
Analyzing
Summer Boards Company manufactures surf boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for May:
In addition, the following information is available:
- Materials and direct labor were applied to six jobs in May:
b.Factory overhead is applied to each job at a rate of 120% of direct labor cost.
c.The May 1 Work in Process balance consisted of two jobs, as follows:
d. Customer jobs completed and units sold in May were as follows:
Instructions
Determine the May 31 balances for each of the inventory accounts and factory overhead.
Concept introduction:
Direct Cost:
The cost which is directly related to the product and affects those items directly which contribute to the revenue generation in the business is referred as direct cost.It makes a direct relation to the manufacturing cost.
Indirect Cost:
The cost which is not directly related to the product and does not affect those items directly which contribute to the revenue generation in the business is referred as indirect cost. These can be fixed costs or such costs that are incurred as a whole and cannot be related to manufacturing cost.
The balances at
Answer to Problem 10.4.2P
The closing balances on
Explanation of Solution
The balance of material accounton
Date | Particulars | Amount | Date | Particulars | Amount |
Opening balance | Requisitions | ||||
Purchases | |||||
Closing balance | |||||
Total | Total |
The balance of work in process accounton
Date | Particulars | Amount | Date | Particulars | Amount |
Opening balance | Finished goods | ||||
Direct material | |||||
Direct Labor | |||||
Factory overhead | Closing balance | ||||
Completed jobs | |||||
Total | Total |
The balance of finished goods accounton
Date | Particulars | Amount | Date | Particulars | Amount |
Opening balance | Cost of goods sold | ||||
Total cost of finished goods | Closing balance | ||||
Work in process | |||||
Total | Total |
The balance of factory overhead accounton
Date | Particulars | Amount | Date | Particulars | Amount |
Opening balance | |||||
Wages payable | Factory overhead applied | ||||
Indirect material | Overhead under applied transfer to COGS | ||||
Other overhead | |||||
Total | Total |
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- Kokomo Kayak Inc. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during the month of March: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 18,000 units finished and transferred to stockroom. Work in process, end of period, 3,000 units, two-thirds completed. Required: Prepare a cost of production summary for March.arrow_forwardAnalyzing manufacturing cost accounts Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May: In addition, the following information is available: A. Materials and direct labor were applied to six jobs in May: B. Factory overhead is applied to each job at a rate of 50% of direct labor cost. C. The May 1 Work in Process balance consisted of two jobs, as follows: D. Customer jobs completed and units sold in May were as follows: Instructions 1. Determine the missing amounts associated with each letter. Provide supporting computations by completing a table with the following headings: 2. Determine the May 31 balances for each of the inventory accounts and factory overhead.arrow_forwardDublin Brewing Co. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during October: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 13,000 units finished and transferred to stockroom Work in process, end of period, 2,000 units one-half completed Required: Prepare a cost of production summary for October.arrow_forward
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