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Problem 16.4A

The Flow of Manufacturing Costs Through Perpetual Inventory Records

The following T accounts summarize the flow of manufacturing costs during the current year through the ledger accounts of Payback Corporation:

Materials Inventory

Work in Process Inventory

Beg. balance$  18,000

Beg. balance$  20,000

360,000

?

?

?

Ending balance$  14,000

230,000

400,000

Ending balance$25,000

Direct Labor

Finished Goods Inventory

$225,000

$230,000

Beg. balance$  98,000

Ending balance$    5,000

?

?

Ending balance$ 110,000

Manufacturing Overhead

Cost of Goods Sold

$400,000

$400,000

?

Instructions

From the data supplied above, indicate the following amounts.  Some amounts are shown in the T accounts above; others require short computations.  (Show all computations.)

a.

Purchases during the year of direct materials.

b.

The cost of direct materials used.

c.

Direct labor payrolls paid during the year.

d.

Direct labor costs assigned to production.

e.

The overhead application rate in use throughout the year, assuming that overhead is applied as a percentage of direct labor costs.

f.

Total manufacturing costs charged to the Work in Process Inventory account during the current year.

g.

The cost of finished goods manufactured.

h.

The cost of goods sold.

i.

The total costs to be classified as inventory in the year-end balance sheet.

16-4Alternate Problems for use with Financial and Managerial Accounting, 12e

© The McGraw-Hill Companies, 2002

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