Swiss Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning BalanceEnding Balance Raw materials$ 44,800 $ 70,400 Work in process $ 86,400 $ 28,800 Finished Goods $ 198,400 $ 214,400 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 105,600 machine-hours and incur $739,200 in fixed manufacturing overhead cost and $7.20 variable manufacturing overhead per direct machine hour. The following transactions were recorded for the year: 1. Raw materials were purchased on account, $1,008,000. 2. Raw materials were requisitioned for use in production, $982,400 ($899,200 direct and $83,200 indirect). 3. The following employee costs were incurred: direct labor, $1,206,400; indirect labor, $307,200; and administrative salaries, $422,400. 4. Advertising expenses incurred, $470,400. 5. Factory utility costs incurred, $224,000. 6. Depreciation for the year was $406,400 of which $384,000 is related to factory operations and $22,400 is related to selling, general, and administrative activities. 7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 108,800 machine-hours. 8. Over or under applied manufacturing overhead is closed to Cost of Goods Sold. a. Calculate the predetermined overhead rate. (Show your work). b. Calculate the manufacturing overhead applied. (Show your work). c. What was the amount of total manufacturing cost added for the period? (Show your work. You may use a formula. A full schedule is not required.) d. Calculate the cost of goods manufactured for the period. (Show your work. You may use a formula. A full schedule is not required). e. What is the amount of the cost of goods available for sale? (Show your work. You may use a formula. A full schedule is not required). f. Use a t-account to show the actual and applied manufacturing overhead costs for the period. Label the elements. Abbreviations are acceptable provided that they are clear, ie. POR predetermined overhead rate.) g. Was the overhead underapplied or overapplied? By how much? h. What journal entry would be made to dispose of the manufacturing overhead account balance? The journal entry must be written in proper format to receive credit for the answer. i. What will be the amount of the adjusted cost of goods sold? (Show your work. You may use a formula. A full schedule is not required) j. Compute the amount of Selling and Administrative costs for the period. List which costs are included in your answer.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Swiss Corporation is a manufacturing firm that uses
Beginning BalanceEnding Balance
Raw materials$ 44,800 $ 70,400
Work in process $ 86,400 $ 28,800
Finished Goods $ 198,400 $ 214,400
The company applies
1. Raw materials were purchased on account, $1,008,000.
2. Raw materials were requisitioned for use in production, $982,400 ($899,200 direct and $83,200 indirect).
3. The following employee costs were incurred: direct labor, $1,206,400; indirect labor, $307,200; and administrative salaries, $422,400.
4. Advertising expenses incurred, $470,400.
5.
6. Depreciation for the year was $406,400 of which $384,000 is related to factory operations and $22,400 is related to selling, general, and administrative activities.
7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 108,800 machine-hours.
8. Over or under applied manufacturing overhead is closed to Cost of Goods Sold.
a. Calculate the predetermined overhead rate. (Show your work).
b. Calculate the manufacturing overhead applied. (Show your work).
c. What was the amount of total manufacturing cost added for the period? (Show your work. You may use a formula. A full schedule is not required.)
d. Calculate the cost of goods manufactured for the period. (Show your work. You may use a formula. A full schedule is not required).
e. What is the amount of the cost of goods available for sale? (Show your work. You may use a formula. A full schedule is not required).
f. Use a t-account to show the actual and applied manufacturing overhead costs for the period. Label the elements. Abbreviations are acceptable provided that they are clear, ie. POR predetermined overhead rate.)
g. Was the overhead underapplied or overapplied? By how much?
h. What
i. What will be the amount of the adjusted cost of goods sold? (Show your work. You may use a formula. A full schedule is not required)
j. Compute the amount of Selling and Administrative costs for the period. List which costs are included in your answer.
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