Question

Can you explain how to calculate overhead and why my ending raw materials balance is wrong?

(The following information applies to the questions displayed below. Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $669,000; Raw Materials Inventory, $64,000; Work in Process Inventory, $25,000; Finished Goods Inventory, $56,000; Common Stock, $594,000; and Retained Earnings, $220,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Paid $25,000 of research and development costs. 2. Paid $49,000 for raw materials that will be used to make eBook readers. 3. Placed $88,000 of the raw materials cost into the process of manufacturing eBook readers. 4. Paid $78,000 for salaries of selling and administrative employees. 5. Paid $106,000 for wages of production workers. 6. Paid $178,000 to purchase equipment used in selling and administrative offices. 7. Recognized depreciation on the office equipment. The equipment was acquired on January 1, 2018. It has a $18,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost - salvage) = useful life]. Specifically, ($178,000 - $18,000) = 8 = $20,000. 8. Paid $124,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $25,000 salvage value and a nine-year life. The amount of depreciation is computed as [(Cost - salvage) - useful life). Specifically, ($124,000 - $25,000) = 9 = $11,000. 10. Paid $58,000 for rent and utility costs on the manufacturing facility. 11. Paid $78,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost). 12. Completed and transferred eBook readers that had total cost of $254,000 from work in process inventory to finished goods. 13. Sold 880 eBook readers for $424,000. 14. It cost Antioch $193,600 to make the eBook readers sold in Event 13. < Prey 3 of 3 Next >

Answer 1

1) Ans: "A" COMPANY Schedule of Cost of Goods Manufactured and For the Year Ended December 31, 2018 Beginning raw materials Inventory | S 64,000 Purchases $ 49,000 Raw materials available $1,13,000 = $64,000+ $49,000 Ending raw materials inventory $ 25,000 = $113,000 - $88,000 Raw materials used S 88.000 $1.06.000 Overhead $ 58,000 Total manufacturing costs $2,52,000 = $88,000+ $106,000+ $58,000 Beginning work in process inventory $ 25,000 Total work in process inventory | $2.77.000] =$252,000+$25,000 Ending work in process inventory S 23,0001 = $277,000 - $254,000 Cost of goods manufactured $254.000 Labor | Beginning finished goods inventory Goods available Ending finished goods inventory Cost of goods sold $56,000 $3,10,000 = $254.000 + $56,000 $1,16,4001 = $310,000 - $193.600 $1.93.600

"A" COMPANY Income Statement For the Year Ended December 31, 2018 Sales revenue $4.24.000 Cost of goods sold $1,93,600 Gross margin $2,30,400 = $422.000 - $158.400 = $25,000 + $78,000 + $20,000+ $11,000+ Selling and administration expense $2.12,000 $78.000 Net income $ 18,400 = $263,600 - $188,000 "A" COMPANY Balance Sheet As of December 31, 2018 Assets Amount = [$669,000+ $424,000 ] - [ $25,000 + 49,000+ Cash $3,97,000 $78,000+ $106,000+ $178,000+ $124.000 + $58.000 + 78.000 ] Raw materials S 25,000 Work in process inventory | S 23,000 Finished goods $1,16,400 Office furniture $1,58.000 = $178,000 - $20,000 Manufacturing equipment $1,13,000=$124.000 - $11,000 =$529,000+ $29,000+ $40,000+ $143.600+ $8,32,400 $55,000+ $105,000 Total assets Stock holder's equity : Common stock Retained earnings $5.94.000 =[$220,000+ $424,000 ] - [ $25,000 + $78.000 + $2,38,400 $20,000+ $11,000+ $78,000 + $193,600 ] $8,32,400 Total stockholders' equity