ACCT 2230 Study Guide - Final Guide: Finished Good, Income Statement
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Yu Technology Co. manufactures CDs and DVDs for computer software and entertainment companies. Yu uses job order costing and has a perpetual inventory system. The business has a highly labour intensive production process, so it applies manufacturing overhead to jobs based on direct labour cost. Yu expects to incur $1,080,000 0f manufacturing overhead costs and estimated direct labour costs of $900,000 during 2015. At the end of March 2015,
Yu Technology reported work in process inventory of $15,000
During April 2015, Yu Technology recorded the following transactions.
1) Materials requisitioned for use in production:
Direct materials: $120,000
Indirect materials: $20,000
2) Advertising costs were incurred, $15,000.
3) Salaries and wages incurred as follows:
Direct labour $121,875
Indirect labour $40,625
Selling and administrative salaries $ 25,000
4) Insurance expired during the year, $30,000 (90% relates to the factory, the remainder is on selling and administrative items).
5) Depreciation recorded for the year, $80,000 (75% relates to factory assets and the remainder relates to selling and administrative assets).
6) Utilities expense incurred, $53,750 (80% of this amount relates to the factory, the remainder relates to the administrative offices).
7) Applied manufacturing overhead costs to jobs
8) Two jobs were completed with total costs of $120,000 & $85,000 respectively. They were sold on account at a mark-up of 75% on cost.
All purchases and services were acquired on account.
(d) Record a journal entry to close manufacturing overhead to cost of goods sold. | ||||||||
(e) Prepare an income statement for the year | ||||||||
(f) Determine the balance in work in process inventory on April 30. |
Passera Inc. manufactures a single product in a continuousprocessing environment. All materials are added at the beginning ofthe process, and conversion costs are applied evenly throughout theprocess. To assign costs to inventories, the company usesweighted-average process costing.
The following information was available for 2016:
Sales (selling price per unit, $40) | $4,080,000 | |
Actual manufacturing overhead | 660,000 | |
Selling and administrative expenses | 328,000 |
Unit costs of production: | ||
Direct materials (1 kilogram) | $ 6.00 | |
Direct labour (1/2 hour) | 8.00 | |
Overhead | 9.00 | |
Total | $23.00 |
Units transferred to finished goods | 140,000 units | |
Materials purchased | 125,000 kilograms | |
Materials used in process | 136,000 kilograms |
An inventory count at year end (December 31, 2016) revealed thatthe inventories had the following balances:
Raw materials | 8,000 kilograms | |
Work in process (45% complete) | 22,000 units | |
Finished goods | 45,000 units |
The January 1, 2016, work in process units are 70% complete. Theunit cost of production was the same in 2016 as it was in2015.
Calculate the following amounts for Passera Inc.:
1.The opening (January 1, 2016) balance in units and costs of(1) raw materials, (2) work in process, and (3) finished goods.
2.The equivalent units for 2016 for (1) materials and (2)conversion costs.
3.The total cost for 2016 for (1) materials used and (2)conversion applied.
4.Thecost of ending work in process for 2016.
5.The cost of units completed and transferred to finishedgoods.