selected t-accounts of moore company are given below for the just completed year:

required:
1. what was the cost of raw materials used in production?
2. how much of the materials in (1) above consisted of indirect materials?
3. how much of the factory labor cost is indirect labor?
4. what was the cost of goods manufactured?
5. what was the unadjusted cost of goods sold? do not include any underapplied or overapplied overhead in your answer.
6. if overhead is applied to production using direct labor cost, what was the predetermined overhead rate?
7. was manufacturing overhead underapplied or overapplied? by how much?
8. compute the ending balance in work in process. assume this balance consists entirely of goods started during the year. if \$10,500 of this balance is direct labor cost, how much is direct materials cost? applied overhead cost?

Question

selected t-accounts of moore company are given below for the just completed year:

required:
1. what was the cost of raw materials used in production?
2. how much of the materials in (1) above consisted of indirect materials?
3. how much of the factory labor cost is indirect labor?
4. what was the cost of goods manufactured?
5. what was the unadjusted cost of goods sold? do not include any underapplied or overapplied overhead in your answer.
6. if overhead is applied to production using direct labor cost, what was the predetermined overhead rate?
7. was manufacturing overhead underapplied or overapplied? by how much?
8. compute the ending balance in work in process. assume this balance consists entirely of goods started during the year. if \$10,500 of this balance is direct labor cost, how much is direct materials cost? applied overhead cost?

Accepted Answer

{ "quality": "clear", "question_count": 8, "skills_matched": [ "step_cot", "explain_then_answer", "tutor" ], "needs_drawing": false, "concepts_used": [ "Indirect Materials Calculation", "Indirect Labor Calculation", "Cost of Goods Manufactured", "Manufacturing Overhead T-Account", "Work in Process T-Account", "Predetermined Overhead Rate" ], "new_concepts": [], "current_concepts": [ "Indirect Materials Calculation", "Indirect Labor Calculation", "Cost of Goods Manufactured", "Manufacturing Overhead T-Account", "Work in Process T-Account", "Predetermined Overhead Rate", "Overhead Application", "Cost of Goods Sold Calculation" ] } ## Calculate raw materials used in production Using the **Indirect Materials Calculation** knowledge point, we analyze the Raw Materials T-account: - Beginning Balance (1/1): \$25,000 - Debits (Purchases): \$140,000 - Ending Balance (12/31): \$35,000 The total raw materials available for use is: $$ \text{Available} = \$25,000 + \$140,000 = \$165,000 $$ The total raw materials issued (credits) is: $$ \text{Credits} = \text{Available} - \text{Ending Balance} = \$165,000 - \$35,000 = \$130,000 $$ Thus, the cost of raw materials used in production is \$130,000. ## Determine indirect materials used Using the **Work in Process T-Account** and **Indirect Materials Calculation** knowledge points, we find the portion of raw materials that went into production as direct materials: - Direct materials debited to Work in Process: \$100,000 - Total raw materials used in production: \$130,000 The remaining raw materials used must be indirect materials: $$ \text{Indirect Materials} = \text{Total Used} - \text{Direct Materials} = \$130,000 - \$100,000 = \$30,000 $$ ## Determine indirect labor cost Using the **Indirect Labor Calculation** knowledge point, we analyze the Factory Wages Payable T-account and labor costs: - Total factory labor cost incurred (credited to Factory Wages Payable): \$200,000 - Direct labor debited to Work in Process: \$180,000 The remaining factory labor cost is indirect labor: $$ \text{Indirect Labor} = \text{Total Labor Incurred} - \text{Direct Labor} = \$200,000 - \$180,000 = \$20,000 $$ ## Calculate cost of goods manufactured Using the **Cost of Goods Manufactured** and **Work in Process T-Account** knowledge points, we find the cost of goods completed and transferred to Finished Goods: - The credit side of the Work in Process T-account represents the Cost of Goods Manufactured. - From the Work in Process T-account, the credit entry is explicitly given as \$500,000. Therefore, the cost of goods manufactured is \$500,000. ## Calculate unadjusted cost of goods sold Using the **Work in Process T-Account** and Finished Goods T-account: - Beginning Balance Finished Goods (1/1): \$50,000 - Debits (Cost of Goods Manufactured): \$500,000 - Ending Balance Finished Goods (12/31): \$75,000 The unadjusted cost of goods sold (credits to Finished Goods) is: $$ \text{Unadjusted COGS} = \$50,000 + \$500,000 - \$75,000 = \$475,000 $$ ## Calculate predetermined overhead rate Using the **Predetermined Overhead Rate** knowledge point: - Applied Overhead (from Work in Process debits): \$223,200 - Direct Labor Cost (from Work in Process debits): \$180,000 The predetermined overhead rate is calculated as: $$ \text{Rate} = \frac{\text{Applied Overhead}}{\text{Direct Labor Cost}} = \frac{\$223,200}{\$180,000} = 1.24 \text{ (or } 124\% \text{)} $$ ## Determine underapplied or overapplied overhead Using the **Manufacturing Overhead T-Account** knowledge point: - Actual Overhead Incurred (Debits): \$203,200 - Applied Overhead (Credits to Manufacturing Overhead, which equals the debit to Work in Process): \$223,200 Since applied overhead exceeds actual overhead: $$ \text{Overapplied Overhead} = \$223,200 - \$203,200 = \$20,000 $$ The overhead was overapplied by \$20,000. ## Compute ending balance in Work in Process and its components Using the **Work in Process T-Account** knowledge point: - Beginning Balance (1/1): \$30,000 - Total Debits: \$100,000 (Direct Materials) + \$180,000 (Direct Labor) + \$223,200 (Overhead) = \$503,200 - Total Credits (Cost of Goods Manufactured): \$500,000 The ending balance in Work in Process is: $$ \text{Ending WIP} = \$30,000 + \$503,200 - \$500,000 = \$33,200 $$ Given that direct labor cost in this ending balance is \$10,500: - Using the predetermined overhead rate of 124% of direct labor cost, the applied overhead cost in ending WIP is: $$ \text{Applied Overhead} = \$10,500 \times 1.24 = \$13,020 $$ - The remaining balance is the direct materials cost: $$ \text{Direct Materials} = \text{Ending WIP} - \text{Direct Labor} - \text{Applied Overhead} = \$33,200 - \$10,500 - \$13,020 = \$9,680 $$ ## Question 1 The cost of raw materials used in production was \$130,000. ## Question 2 The amount of indirect materials was \$30,000. ## Question 3 The amount of indirect labor cost was \$20,000. ## Question 4 The cost of goods manufactured was \$500,000. ## Question 5 The unadjusted cost of goods sold was \$475,000. ## Question 6 The predetermined overhead rate was 124% of direct labor cost (or \$1.24 per \$1.00 of direct labor cost). ## Question 7 Manufacturing overhead was overapplied by \$20,000. ## Question 8 - Ending balance in Work in Process: \$33,200 - Direct materials cost: \$9,680 - Applied overhead cost: \$13,020 { "subject": "Business", "question_type": "Multi-part", "knowledge_point": [ "Business", "Accounting", "Job-Order Costing" ] }

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Explanation:

Calculate raw materials used in production

Determine indirect materials used

Determine indirect labor cost

Calculate cost of goods manufactured

Calculate unadjusted cost of goods sold

Calculate predetermined overhead rate

Determine underapplied or overap…

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