The following selected data were taken from the records of the Fisher Foil Company. The company uses a job costing system to account for its manufacturing costs. Fisher's fiscal year runs from January 1 to December 31; manufacturing overhead is closed out only at the end of the fiscal year. The following information relates to August operations. (1) Jobs in process on August 1.Job No.Materials Labor OverheadW12$800 $1,200 ??X13 1,000 1,620 ??(2) Jobs completed during August: W12, X13, Y14.(3) Material requisitions and labor time tickets indicated the following:Job No.MaterialRequisitions Time TicketsW12$610 $760 X13 370 1,420 Y14 2,780 3,100 Z15 4,050 1,080 General use 390 540 (4) Jobs sold during August: W12, X13.(5) Fisher applies
overhead to production based upon labor costs.(6) Selected account balances on August 1 were: Overhead$1,400overappliedMaterials 5,175 Work in process 9,555 Finished goods -0- (7) Various overhead incurred (excluding indirect materials and indirect labor) during August, $13,500.(8) Materials (direct and indirect) purchased during August, $10,905.Required:(a) What is the balance in the Materials Inventory account on August 31?(b) Is the manufacturing overhead account over- or underapplied on August 31? By how much?(c) Compute the cost of goods manufactured for August.(d) Compute the cost of goods sold for August.(e) What is the balance of the Work-in-Process Inventory account on August 31?
What will be an ideal response?
(a)
$5,175 + $10,905 - ($610 + $370 + $2,780 + $4,050 + $390) = ending balance = $7,880.
(b)
Overhead in Work-in-Process Inventory, August 1: $9,555 - ($800 + $1,000) - ($1,200 + $1,620) = $4,935; Overhead rate = $4,935/$2,820 = 175% of Direct Labor Costs.
MOH debits: IM $390 + IL $540 + incurred $13,500 = $14,430.
MOH credits: Beg Bal $1,400 + applied [($760 + $1,420 + $3,100 + $1,080) × 175%] = $12,530.
Ending MOH: $14,430 - $12,530 = $1,900 debit (underapplied) balance.
(c)
| Job | Beg Bal | DM | DL | OH | Total | ||||||
| W12 | $ | 4,100 | $ | 610 | $ | 760 | $ | 1,330 | $ | 6,800 | |
| X13 | 5,455 | 370 | 1,420 | 2,485 | 9,730 | ||||||
| Y14 | 2,780 | 3,100 | 5,425 | 11,305 | |||||||
| Cost of goods manufactured | $ | 27,835 | |||||||||
W12 + X13: $6,800 + $9,730 = $16,530.
(e)
Job Z15: Material ($4,050) + Labor ($1,080) + Overhead ($1,890) = $7,020.
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