Blue, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By the end of December, its fiscal year-end, Blue had accumulated Cost of Goods Sold in the amount of $266,000. Blue's business model is to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $31,000 and $36,000, respectively. on December 31. Blue does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all direct materials) is $101,000. Blue utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH rate is $2.25/direct labor hour. Budgeted MOH at the beginning of the year was $171,000; actual MOH costs incurred by the end of the year were $203,000. Actual direct labor hours used were 82.000 (a) Was Blue's MOH cost for the year under-or over applied? By how much? MOH cost was by $
Blue, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By the end of December, its fiscal year-end, Blue had accumulated Cost of Goods Sold in the amount of $266,000. Blue's business model is to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $31,000 and $36,000, respectively. on December 31. Blue does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all direct materials) is $101,000. Blue utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH rate is $2.25/direct labor hour. Budgeted MOH at the beginning of the year was $171,000; actual MOH costs incurred by the end of the year were $203,000. Actual direct labor hours used were 82.000 (a) Was Blue's MOH cost for the year under-or over applied? By how much? MOH cost was by $
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Blue, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By
the end of December, its fiscal year-end, Blue had accumulated Cost of Goods Sold in the amount of $266,000. Blue's business model is
to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $31.000 and $36,000, respectively,
on December 31. Blue does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its
December 31 RM Inventory (all direct materials) is $101,000.
Blue utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH
rate is $2.25/direct labor hour. Budgeted MOH at the beginning of the year was $171,000; actual MOH costs incurred by the end of
the year were $203,000. Actual direct labor hours used were 82.000.
(a)
Was Blue's MOH cost for the year under-or overapplied? By how much?
MOH cost was
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