Problem - Hawkeye pierce, Inc. had one job in process at the beginning of the period (Job #1). During the period, Hawkeye began work on Jobs #2, and #3. At the end of the period, Job #1 had been sold, Job #2 was finished, and Job #3 was still in process. Hawkeye applies overhead to jobs based on machine hours. The inventory balances at the beginning of the year were:
Raw materials inventory $40,500
WIP inventory 35,000
Finished goods inventory 0
The following relevant events occurred during the period:
1. Purchased raw materials costing $150,000
2. Issued direct materials into production:
Job #1 $25,000
Job #2 80,000
Job #3 70,000
3. Issued indirect materials into production, $5,000
4. Used direct labor hours. Direct labor is paid $8 per hour.
Job #1 5,000 hours
Job #2 20,000 hours
Job #3 8,000 hours
5. Used indirect labor, $40,000
6. Other overhead costs incurred, $190,000
7. Machine hours used. The predetermined overhead rate is $10 per machine hour
Job #1 2,000 hours
Job #2 15,000 hours
Job #3 6,000 hours
8. Selling and administrative costs incurred, $65,000
9. Job #1 sold for $260,000
Required -
1. What is Hawkeye's cost of goods manufactured?
2. What is Hawkeye's cost of goods sold (adjusted)?
3. What is Hawkeye's net income (before tax)?
4. What amount would be shown on Hawkeye's balance sheet for each of the following accounts?