39. ABC Company reported 5,000 units of Product X valued at $520,000 in its ending finished goods inventory account. Accounting records indicated that ABC used 50,000 pounds of raw materials valued at $20,000 in making its finished goods inventory, 2000 hours of direct labor, and 10,000 hours of machine time. Earlier in the year, ABC established a predetermined overhead rate equal to $5 per machine hour. What is the total dollar amount of labor cost that comprises the $520,000 of ABC's ending finished goods inventory? O $530,000 O $540,000 O $440,000 $550,000

39. ABC Company reported 5,000 units of Product X valued at $520,000 in its ending finished goods inventory account. Accounting records indicated that ABC used 50,000 pounds of raw materials valued at $20,000 in making its finished goods inventory, 2000 hours of direct labor, and 10,000 hours of machine time. Earlier in the year, ABC established a predetermined overhead rate equal to $5 per machine hour. What is the total dollar amount of labor cost that comprises the $520,000 of ABC's ending finished goods inventory? O $530,000 O $540,000 O $440,000 $550,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

39. ABC Company reported 5,000 units of Product X valued at $520,000 in its ending finished
goods inventory account. Accounting records indicated that ABC used 50,000 pounds of raw
materials valued at $20,000 in making its finished goods inventory, 2000 hours of direct labor, and
10,000 hours of machine time. Earlier in the year, ABC established a predetermined overhead rate
equal to $5 per machine hour. What is the total dollar amount of labor cost that comprises the
$520,000 of ABC's ending finished goods inventory?
O $530,000
O $540,000
O $440,000
O $550,000
O $450,000

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Pikachu Company applies manufacturing overhead to production at 70% of direct labor cost. During the year ended 20xx, manufacturing overhead of $139,790 was applied to production; actual manufacturing overhead was $157,700. Ending Work in Process Inventory was $23,000 and ending Finished Goods Inventory was $30,910. Work in Process Inventory increased by 15% during the year and Finished Goods Inventory increased by 10% during the year. Unadjusted Cost of Goods Sold was $573,600. Complete the following schedule: Item Direct Materials Used in Production Direct Labor Manufacturing Overhead Applied Current Manufacturing Costs Beginning Work in Process Inventory Ending Work in Process Inventory Cost of Goods Manufactured Beginning Finished Goods Inventory Ending Finished Goods Inventory Unadjusted Cost of Goods Sold Overhead Adjustment Adjusted Cost of Goods Sold Amount
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Walton Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.00 /unit Direct labor $ 27.40 /unit Manufacturing overhead Variable $ 11.10 /unit Fixed ($18.80/unit for 1,900 units) $ 35,720 Variable selling and administrative expenses $ 10,360 Fixed selling and administrative expenses $ 15,500 The company produced 1,900 units and sold 1,400 of them at $182.00 per unit. Assume that the production manager is paid a 1 percent bonus based on the company’s net income. Required Prepare an income statement using absorption costing. Prepare an income statement using variable costing. Determine the manager’s bonus using each approach. Which approach would you recommend for internal reporting?
29. Tippy Cup Co. also incurred $10,550 for factory overhead and 250 hours of direct labor at $10.30 per hour. Using the cost of direct materials used calculated in Exercise 28, determine the total manufacturing costs incurred for the year. 30. As of January 1, 2018, Tippy Cup Co.'s work in process inventory had a beginning balance of $98,750. The ending balance of work in process inventory totaled $92,350. Using the information calculated in Exercise 29, calculate the cost of goods manufactured for the year.
Pearl Company reported the following actual cost data for the year: Purchase of raw materials (all $300,000 direct) Direct labour cost 200,000 Manufacturing overhead costs 269,000 Change in inventories: Decrease in raw materials $12,000 Decrease in work in process 10,000 Decrease in finished goods 20,000 Pearl Company used a 150% predetermined overhead rate based on direct labour cost. The rate was based on annual estimated overhead cost and direct labour cost of $252,000 and $168,000 respectively. Required: 1. Calculate the cost of goods manufactured. 2. What was the cost of goods sold before adjusting for any under or overapplied overhead? 3. By how much was manufacturing overhead cost under or overapplied? 4. Prepare a summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold.
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