Question

Soldatna Corporation's controller frequently prepared T-accounts to analyze inventory.  However, his penmanship was poor and he is no longer employed by the company.  The following was reconstructed from a scratch pad left on his desk.  The missing values (?) were illegible.  Analyze the information and answer the requirements that follow.
	Raw Materials					Cost of Goods Sold
	beg. bal.	?	?				491,000	?
		175,000					491,000	?
		175,000	?
							481,000
		102,000
	Work in Process					Factory Overhead
	beg. bal.	44,000	460,000				35,000	?
		113,000					40,000
		?					75,000
		?					?
		477,000	?				?	?
		?					?
	Finished Goods
	beg. bal.	131,000	?
		?
		?	?
		100,000
(a)	Overhead is applied at 100% of direct labor cost.  How much was direct labor?
(b)	Was overhead over- or underapplied, and by how much?
(c)	Which inventory category increased?
(d)	Other factory overhead, besides indirect material and indirect labor, was $75,000.  Indirect labor was 25% of the direct labor.  How much was indirect material?
(e)	How much was cost of goods manufactured?

Answer 1

a) Cost of goods sold overapplied = 491,000 - 481,000 =10,000

Factory overhead = 35,000 + 40,000 + 75,000 + 10,000 = 160,000

Direct Labor = 160,000 *100% = 160,000

b) Overhead over applied = $10,000

c) Raw materials inventory category has increased.

d) Indirect labor = 160,000 - 75,000 - 10,000 - 160,000*25% = 35000

e) Cost of goods manufactured = 491,000 + 100,000 - 131,000 = 460,000