ABC company had the following transactions and events during the year ended 31 March 2022. The company uses direct lahor dollars as the allocation base. For the current year, the estimated overhead was $777,000 and estimated direct labor cost was $350,000. Actual costs incurred follows: a. Purchased raw materials on account, $567,000. b. 10% of raw materials purchased was requisitioned as indirect materials. c. Direct labor for production is $320,000, indirect labor is S125,000. d. Some costs for the company and their percentage for factory are shown below, with the remaining percentage for administration costs. Other costs for Total Percentage spent in factory the company Property tax 100,000 90% Utilities 90,000 89% Depreciation 150,000 75% Insurance 180,000 80% Cleaning service fee 85,000 70% Maintenance fee 50,000 90% The bulances of inventory follow: Beginning Ending Raw materials Work-in-process Finished goods $8,000 $25,010 7,500 572,650 25,010 487,810 Required: a) Compute the predetermined overhead rate for the year. b) Compute the amount of underapplied or overapplied overhead for the year. Prepare the adjustment entry for adjusting any underapplied or overapplied overhead to cost of goods sold. c) Prepare a schedule of cost of goods manufactured for the year.
ABC company had the following transactions and events during the year ended 31 March 2022. The company uses direct lahor dollars as the allocation base. For the current year, the estimated overhead was $777,000 and estimated direct labor cost was $350,000. Actual costs incurred follows: a. Purchased raw materials on account, $567,000. b. 10% of raw materials purchased was requisitioned as indirect materials. c. Direct labor for production is $320,000, indirect labor is S125,000. d. Some costs for the company and their percentage for factory are shown below, with the remaining percentage for administration costs. Other costs for Total Percentage spent in factory the company Property tax 100,000 90% Utilities 90,000 89% Depreciation 150,000 75% Insurance 180,000 80% Cleaning service fee 85,000 70% Maintenance fee 50,000 90% The bulances of inventory follow: Beginning Ending Raw materials Work-in-process Finished goods $8,000 $25,010 7,500 572,650 25,010 487,810 Required: a) Compute the predetermined overhead rate for the year. b) Compute the amount of underapplied or overapplied overhead for the year. Prepare the adjustment entry for adjusting any underapplied or overapplied overhead to cost of goods sold. c) Prepare a schedule of cost of goods manufactured for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABC company had the following transactions and events during the year ended 31 March
2022. The company uses direct labor dollars as the allocation base. For the current year, the
estimated overhead was $777,000 and estimated direct labor cost was $350,000.
Actual costs incurred follows:
a. Purchased raw materials on account, $567,000.
b. 10% of raw materials purchased was requisitioned as indirect materials.
c. Direct labor for production is $320,000, indirect labor is $125,000.
d. Some costs for the company and their percentage for factory are shown below, with the
remaining percentage for administration costs.
Other costs for
Total
Percentage
spent in factory
the company
Property tax
100,000
90%
Utilities
90,000
89%
Depreciation
150,000
75%
Insurance
180,000
80%
Cleaning service fee
85,000
70%
Maintenance fee
50,000
90%
The balances of inventory follow:
Beginning Ending
Raw materials
Work-in-process
Finished goods
$8,000
$25,010
7,500
572,650
25,010
487,810
Required:
a) Compute the predetermined overhead rate for the year.
b) Compute the amount of underapplied or overapplied overhend for the year. Prepare the
adjustment entry for adjusting any underapplied or overapplied overhead to cost of goods
sold.
c) Prepare a schedule of cost of goods manufactured for the year.
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