Problem I:
The following data (in thousands of dollars) have been taken from the accounting records of ACME Corporation for the completed year.
|
Sales
|
$860
|
|
Purchase of raw materials
|
$150
|
|
Direct labor
|
$110
|
|
Manufacturing overhead
|
$210
|
|
|
|
Administrative expenses
|
$130
|
|
|
|
Selling expenses
|
$180
|
|
|
|
Raw materials inventory, beginning
|
$40
|
|
|
|
Raw materials inventory, ending
|
$80
|
|
|
|
Work-in-process inventory, beginning
|
$20
|
|
|
|
Work-in-process inventory, ending
|
$80
|
|
|
|
Finished goods inventory, beginning
|
$80
|
|
|
|
Finished goods inventory, ending
|
$150
|
On the basis of the data, complete the following:
• Prepare a schedule of cost of goods manufactured in good form.
• Compute the cost of goods sold in all details.
• Prepare the income statement.
Problem II:
Morrison and Company uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $400,000. The company applies overhead as a percentage of direct labor cost, which is estimated to be $500,000 for the next year. During the year, actual direct labor cost amounted to $520,000 and the actual overhead was as outlined below:
|
Factory rent
|
$80,000
|
|
Indirect materials
|
$40,000
|
|
Indirect labor
|
$100,000
|
|
Maintenance
|
$80,000
|
|
Depreciation
|
$100,000
|
|
Payroll taxes
|
$80,000
|
|
Others
|
$80,000
|
|
Total
|
$560,000
|
On the basis of the data, complete the following:
• Calculate the overapplied or underapplied overhead for the year.
Support your responses with examples.