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Problem 16.7A

Determining and Reporting Product Cost Information

The following are the beginning and ending balances in the inventory accounts of Al’s Parts for 2002:

EndBeginning

of Yearof Year

Inventory accounts:

Materials$47,000$42,000

Work in Process35,00038,000

Finished Goods Inventory?105,000

The amounts debited and credited during the year to the accounts used in recording manufacturing costs are as follows:

DebitCredit

EntriesEntries

Account:

Materials Inventory$   910,000$             ?

Direct Labor405,000410,000

Manufacturing Overhead1,100,0001,100,000

Cost of Goods Sold2,340,000-0-

Work in Process Inventory??

Finished Goods Inventory??

Instructions

a.

Using the given information data, state or compute for the 2002 the following amounts:

1.

Direct materials purchased.

2.

Direct materials used.

3.

Direct labor payrolls paid during the year.

4.

Direct labor costs assigned to units being manufactured.

5.

The year-end liability for direct wages payable.

6.

The overhead application rate, assuming that overhead costs are applied to units being manufactured using 22,000 direct labor hours as an estimated activity base.

7.

Total manufacturing costs debited to the Work in Process Inventory account.

8.

Cost of finished goods manufactured.

9.

Ending inventory of finished goods.

b.

Prepare a schedule of the cost of finished goods manufactured.

Alternate Problems for use with Financial and Managerial Accounting, 12e16-7

© The McGraw-Hill Companies, 2002

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