ADMS 2510 Lecture Notes - Lecture 8: Finished Good, Variable Cost, Fixed Cost
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Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4
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Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $381,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $25,000; factory rent, $31,000; factory utilities, $24,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $650,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 28,000 | $ | 36,000 | ||||||||
Direct labor | 24,000 | 15,000 | ||||||||||
Applied overhead | 12,000 | 7,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 139,000 | 205,000 | $ | 100,000 | ||||||||
Direct labor | 103,000 | 152,000 | 101,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
rev: 03_15_2018_QC_CS-121813
Problem 15-1A Part 1
Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
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Problem 15-1A Part 2
- Materials purchases (on credit).
- Direct materials used in production.
- Direct labor paid and assigned to Work in Process Inventory.
- Indirect labor paid and assigned to Factory Overhead.
- Overhead costs applied to Work in Process Inventory.
- Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
- Transfer of Jobs 306 and 307 to Finished Goods Inventory.
- Cost of goods sold for Job 306.
- Revenue from the sale of Job 306.
- Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
2. Prepare journal entries for the month of April to record the above transactions.
Problem 15-1A Part 3
3. Prepare a schedule of cost of goods manufactured.
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1. Sydney's Barbecue reported the following information:
Sydney's Barbecue
Period Ending December 31, 20XX
Manufacturing costs | $5,400,000 |
Units manufactured | $54,000 |
Beginning inventory in Units | $ 0 |
Note: 45,600 units sold during year at $300 per unit
What is the amount of ending finished goods inventory for theperiod ending December 31, 20XX?
$860,000 | |
$830,000 | |
$840,000 | |
$850,000 | |
$820,000 |
2.Net income reported under absorption costing will exceed netincome reported under variable costing for a given period if
production equals sales for thatperiod. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
variable overhead exceeds fixedoverhead for that period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
production exceeds sales for thatperiod. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
sales exceed production for that period. 3. A company manufactures wallets. Last month's costs were aslisted below:
What were the conversion costs for the month?
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Star Videos, Inc., produces short musical videos for sale to retail outlets. The companyâs balance sheet accounts as of January 1 are given below.
Star Videos, Inc.
Balance Sheet
January 1
Assets
Cash $ 92,000
Accounts receivable 115,600
Inventories:
Raw materials (film, costumes) $ 17,800
Videos in process 60,200
Finished videos awaiting sale 91,200 169,200
Prepaid insurance 12,600
Studio and equipment (net) 603,000
Total assets $ 992,400
Liabilities and Stockholdersâ Equity
Accounts payable $ 211,000
Retained earnings 781,400
Total liabilities and stockholdersâ equity $ 992,400
Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The companyâs predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year:
Film, costumes, and similar raw materials purchased on account, $208,500.
Film, costumes, and other raw materials issued to production, $219,500 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).
Utility costs incurred (on account) in the production studio, $81,600.
Depreciation recorded on the studio, cameras, and other equipment, $90,000. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration.
Advertising expense incurred (on account), $155,500.
Salaries and wages paid in cash as follows:
Direct labor (actors and directors) $ 99,200
Indirect labor (carpenters to build sets, costume designers, and so forth) $ 100,500
Administrative salaries $ 102,400
Prepaid insurance expired during the year, $10,050 (70% related to production of videos, and 30% related to marketing and administrative activities).
Miscellaneous marketing and administrative expenses incurred (on account), $10,350.
Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year.
Videos that cost $548,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.
Sales for the year totaled $1,060,000 and were all on account.
The total cost to produce the videos that were sold according to their job cost sheets was $591,810.
Collections from customers during the year totaled $1,010,000.
Payments to suppliers on account during the year, $585,000.
Underapplied or overapplied overhead $__?__.
Required:
1. Prepare a transaction analysis that records all of the above transactions.
2. Prepare a schedule of cost of goods manufactured for the year.
3. Prepare a schedule of cost of goods sold for the year.
4. Prepare an income statement for the year.
PLEASE SHOW ALL WORK AND BOLD ANSWERS. THANK YOU!!
Prepare a transaction analysis that records all of the above transactions. (Amounts to be deducted should be indicated by a minus sign.)
Prepare a schedule of cost of goods manufactured for the year.
Prepare a schedule of cost of goods sold for the year.
Prepare an income statement for the year.
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