ACC 60171 Campbellsville University Cost of Goods Manufactured Woksheet

For more clarity please refer to attached PDF file.

Part A: Schedules of Cost of Goods Manufactured and Cost of Goods
Sold; Income Statement

Nish Corporation has provided the following data for the month of April:
Sales……………………………………….. $220,000
Raw materials purchases …………… $50,000
Direct labor cost ………………………. $23,000
Manufacturing overhead cost …….. $59,000
Selling expense………………………… $18,000
Administrative expense …………….. $43,000
Inventories: Beginning Ending
Raw materials…….. $26,000 $35,000
Work in process….. $18,000 $22,000
Finished goods……. $42,000 $29,000

Required:

a. Prepare a Schedule of Cost of Goods Manufactured in good form for April.

b. Prepare an Income Statement in good form for April.

Part B: Application of Job Order Costing

Scanlon Company has a job-order costing system and applies manufacturing overhead cost to products
on the basis of machine-hours. The following estimates were used in preparing the
predetermined overhead rate for the most recent year:

Machine-hours…………………………. 95,000

Manufacturing overhead cost …….. $1,710,000

During the most recent year, a severe recession in the company’s industry caused a
buildup of inventory in the company’s warehouses. The company’s cost records revealed
the following actual cost and operating data for the year:

Machine-hours………………………………………………………………….. 75,000

Manufacturing overhead cost ……………………………………………… $1,687,500

Amount of applied overhead in inventories at year-end:

Work in process……………………………………………………………… $337,500
Finished goods……………………………………………………………….. $253,125

Amount of applied overhead in cost of goods sold……………… $759,375

Required:

a. Compute the company’s predetermined overhead rate for the year and the amount of
underapplied or overapplied overhead for the year.

b. Determine the difference between net operating income for the year if the underapplied or
overapplied overhead is allocated to the appropriate accounts rather than closed directly to
Cost of Goods Sold.

Part C: Process Costing using Weighted Average

Timberline Associates uses the weighted-average method in its process costing system. The following
data are for the first processing department for a recent month:

Work in process, beginning:
Units in process……………………………………………….. 2,400

Percent complete with respect to materials………….. 75%

Percent complete with respect to conversion ……….. 50%

Costs in the beginning inventory:
Materials cost ………………………………………………….. $8,400

Conversion cost……………………………………………….. $7,200

Units started into production during the month……….. 20,800

Units completed and transferred out ……………………… 22,200

Costs added to production during the month:
Materials cost ………………………………………………….. $97,400

Conversion cost……………………………………………….. $129,600

Work in process, ending:

Units in process……………………………………………….. 1,000

Percent complete with respect to materials………….. 80%

Percent complete with respect to conversion ……….. 60%

Required:

a. Determine the equivalent units of production.

b. Determine the costs per equivalent unit.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of the units transferred to the next department.

Part D: Process Costing using First-in-First Out (FIFO)

Crone Corporation uses the FIFO method in its processing costing system. The following data concern
the company’s Assembly Department for the month of October.

Cost in beginning work in process inventory…….. $1,920

Units started and completed this month ……………. 3,130

Materials Conversion

Cost per equivalent unit………………………………….. $9.50 $20.40

Equivalent units required to complete the units in
beginning work in process inventory…………….. 360 140

Equivalent units in ending work in process
inventory …………………………………………………… 330 264

Required:

Determine the cost of ending work in process inventory and the cost of units transferred out of
the department during October using the FIFO method.

Part E: Activity-Based Costing

Welk Manufacturing Corporation has a traditional costing system in which it applies manufacturing
overhead to its products using a predetermined overhead rate based on direct labor-hours
(DLHs). The company has two products, H16Z and P25P, about which it has provided the
following data:

H16Z P25P

Direct materials per unit……………. $10.20 $50.50

Direct labor per unit …………………. $8.40 $25.20

Direct labor-hours per unit ………… 0.40 1.20

Annual production……………………. 30,000 10,000

The company’s estimated total manufacturing overhead for the year is $1,464,480 and the
company’s estimated total direct labor-hours for the year is 24,000.

The company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. Data for this proposed activity-based costing
system appear below:

Activities and Activity Measures Estimated Overhead Cost

Supporting direct labor (DLHs)…………….. $ 552,000

Setting up machines (setups) ………………… 132,480

Parts administration (part types)……………. 780,000

Total………………………………………………….. $1,464,480

H16Z P25P Total

Supporting direct labor …… 12,000 12,000 24,000

Setting up machines……….. 864 240 1,104

Parts administration ……….. 600 960 1,560

Required:

a. Determine the manufacturing overhead cost per unit of each of the company’s two products
under the traditional costing system.

b. Determine the manufacturing overhead cost per unit of each of the company’s two products
under activity-based costing system.