ACCOUNTING-Arnold Company is a manufacturing firm that uses job-order costing

QUESTION

Question 1
Arnold
Company is a manufacturing firm that uses job-order costing. The company’s
inventory balances were as follows at the beginning and end of the year:

Beginning
Balance

Ending
Balance

Raw materials

$21,000

$24,000

Work-in-process

$40,000

$22,000

Finished goods

$26,000

$41,000

The company applies overhead to jobs using a
predetermined overhead rate based on machine-hours. At the beginning of the
year, the company estimated that it would work 38,000 machine-hours and incur
$266,000 in manufacturing overhead cost. The following transactions were
recorded for the year: Raw materials were purchased, $300,000.

Raw materials were
requisitioned for use in production, $297,000 $(281,000 direct and $16,000
indirect).
The following employee costs
were incurred: direct labor, $389,000; indirect labor, $62,000; and
administrative salaries, $176,000.
Selling costs, $160,000.
Factory utility costs, $19,000.
Depreciation for the year was
$143,000 of which $137,000 is related to factory operations and $6,000 is
related to selling, general, and administrative activities.
Manufacturing overhead was
applied to jobs. The actual level of activity for the year was 34,000
machine-hours.
Sales for the year totaled
$1,283,000

On the basis of the above data, you are required to do the
following:
i) Prepare a schedule of
cost of goods manufactured in good form.
ii) Was the overhead
underapplied or overapplied? By how much?
iii) Prepare an income
statement for the year in good form. The company closes any underapplied or
overapplied overhead to Cost of Goods Sold.
Q2
Natraj
Company uses the weighted-average method in its process costing system. The
Curing Department of Harmon Company reported the following information for the
month of November.

Units

Percentage
Complete With Respect to Conversion

Work in process, November 1

10,000

80%

Units started

28,000

Completed and transferred out

30,000

Work in process, November 30

8,000

30%

Cost of November:

Materials

Conversion

Work in process, November 1

$34,500

$48,600

Added during the month

$146,000

$194,400

All materials are added at the beginning of the
process.

Compute the following items using the weighted-average
method:

The equivalent units of
production for materials.
The cost per equivalent unit
for conversion.
The total cost assigned to
units transferred out of the curing department during November.
The cost assigned to
work-in-process inventory as of November 30

ANSWER:

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