Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year:
|
Beginning Balance |
Ending Balance |
|||
|
Raw materials |
$ |
14,450 |
$ |
22,450 |
|
Work in process |
$ |
27,450 |
$ |
9450 |
|
Finished Goods |
$ |
62,450 |
$ |
77,450 |
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,450 machine-hours and incur $264,255 in manufacturing overhead cost. The following transactions were recorded for the year:
Raw materials were purchased, $315,450.
Raw materials were requisitioned for use in production, $307,450 ($280,550 direct and $26,900 indirect).
The following employee costs were incurred: direct labor, $377,450; indirect labor, $96,450; and administrative salaries, $172,450.
Selling costs, $147,450.
Factory utility costs, $10,450.
Depreciation for the year was $154,000 of which $138,000 is related to factory operations and $16,000 is related to selling, general, and administrative activities.
Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,090 machine-hours.
Sales for the year totaled $1,271,000.
Required:
Do not enter any commas (except for the pre-determined OH rate) and round to the nearest dollar
Based on the data presented above, complete the following Table
|
Pre-Determined OH Rate (round to 2 decimal places) |
$ |
|
Direct Materials used in Production |
$ |
|
Direct Labor |
$377,450 |
|
Total Manufacturing Costs |
$ |
|
Cost of Goods Manufactured |
$ |
|
Adjusted Cost of Goods Sold |
$ |
|
Total Selling and Admin Exp |
$335,900 |
|
Operating Income |
$ |
Solution:
Predetermined overhead rate = Estimated overhead /estimated machine hours
= $264,255 / 33450 = $7.90 per machine hour
| Baab Corporation | ||
| Schedule of cost of goods manufactured | ||
| Particulars | Details | Amount |
| Direct Material: | ||
| Beginning material inventory | $14,450.00 | |
| Cost of material purchased | $315,450.00 | |
| Cost of material available | $329,900.00 | |
| Less: Ending material inventory | $22,450.00 | |
| Total material used | $307,450.00 | |
| Less: Indirect material used | $26,900.00 | |
| Direct material used | $280,550.00 | |
| Direct labor | $377,450.00 | |
| Manufacturing overhead applied (34090 * $7.90) | $269,311.00 | |
| Total manufacturing cost for the year | $927,311.00 | |
| Add: Beginning WIP | $27,450.00 | |
| Total cost of work in process during the year | $954,761.00 | |
| Less: Ending WIP | $9,450.00 | |
| Cost of goods manufactured | $945,311.00 | |
| Computation of Adjusted Cost of goods sold | |
| Particulars | Amount |
| Cost of goods manufactured | $945,311.00 |
| Add: Beginning finished goos inventory | $62,450.00 |
| Less: Ending finished goods inventory | $77,450.00 |
| Unadjusted cost of goods sold | $930,311.00 |
| Add: Underapplied overhead ($26,900 + $96,450 + $10,450 + $138,000 - $269,311) | $2,489.00 |
| Adjusted cost of goods sold | $932,800.00 |
| Baab Corporation | ||
| Income Statement | ||
| Particulars | Details | Amount |
| Sales | $1,271,000.00 | |
| Cost of goods sold | $932,800.00 | |
| Gross Profit | $338,200.00 | |
| Selling and administrative expenses | ||
| Administrative salaries | $172,450.00 | |
| Selling Costs | $147,450.00 | |
| Depreciation Expense | $16,000.00 | |
| Total Selling and administrative expenses | $335,900.00 | |
| Net Income | $2,300.00 | |
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as...