The following cost data for the year ending 30 June 2022 relate to Aggro-tech LtdThe company uses normal costing and manufacturing overhead is applied at the rate of 200% of direct labour cost.Over or under-applied manufacturing overhead is closed on an annual basis to the cost of goods sold and this has been included in the above dataRequired:(a) Calculate the amounts to be charged to work in process, finished goods inventory and cost of goods sold for the Fertiliser Division at the end of 30 June 2022 if proration method is used.(b) Prepare the necessary journal entries for (a). SalesInventories at 1 July 2021Raw materialsWork in processFinished goodsInventories at 30 June 2022Raw materialsWork in processFinshed goodsDirect material usedPurchase of raw materialsDirect laborActual manufacturing overheadSelling and adminstrative expensesTotal manufacturing costsCost of goods manufacturedCost of goods available for saleCost of goods soldGross profitNet profitDrone Division Fertiliser Division$$600,00018,75018,75025,00037,5006,25031,25068,75087,500156,250315,00051,250537,500550,000575,000543,75053,750(2,500)4,625,000300,000175,000250,000400,000150,000150,000475,000575,0001,125,0002,238,7503,303,7503,850,0003,875,0004,125,0003,963,750661,2502,642,500

When the actual overhead is more than applied or budgeted overhead it is known as underapplied…

Answered: (a) Calculate the amounts to be charged…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following cost data for the year ending 30 June 2022 relate to Aggro-tech Ltd

The company uses normal costing and manufacturing overhead is applied at the rate of 200% of direct labour cost.

Over or under-applied manufacturing overhead is closed on an annual basis to the cost of goods sold and this has been included in the above data

Required:

(a) Calculate the amounts to be charged to work in process, finished goods inventory and cost of goods sold for the Fertiliser Division at the end of 30 June 2022 if proration method is used.

(b) Prepare the necessary journal entries for (a).

Sales
Inventories at 1 July 2021
Raw materials
Work in process
Finished goods
Inventories at 30 June 2022
Raw materials
Work in process
Finshed goods
Direct material used
Purchase of raw materials
Direct labor
Actual manufacturing overhead
Selling and adminstrative expenses
Total manufacturing costs
Cost of goods manufactured
Cost of goods available for sale
Cost of goods sold
Gross profit
Net profit
Drone Division Fertiliser Division
$
$
600,000
18,750
18,750
25,000
37,500
6,250
31,250
68,750
87,500
156,250
315,000
51,250
537,500
550,000
575,000
543,750
53,750
(2,500)
4,625,000
300,000
175,000
250,000
400,000
150,000
150,000
475,000
575,000
1,125,000
2,238,750
3,303,750
3,850,000
3,875,000
4,125,000
3,963,750
661,250
2,642,500

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