Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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  1. What is the balance in the Cost of Goods Sold account after the adjustment?

    2.Post the appropriate entries to Work in Process Inventory Control account & determine the account balance on January 31, the end of the month.

    3.
PART 1
(25 marks)
Aubergine is a manufacturer of contemporary cases for tablets. The business uses a perpetual
inventory system and has a highly labour-intensive production process, so it applies manufacturing
overhead based on direct labour hours. Any overhead variance is deemed to be immaterial and
therefore closed out to Cost of Goods Sold.
Aubergine's pre-determined overhead application rate for 2024 was computed from the following data:
Total estimated factory overheads
Total estimated direct labour hours
$4,200,000
35,000
During the first month of 2024, the business recorded the following transactions.
Purchased $500,000 worth of materials on account. Separately, Aubergine paid a $3,540 bill for
freight in.
ii) Incurred manufacturing wages of $1,065,000
iii) Issued direct materials and used direct labour in manufacturing
Job # Direct Materials Direct Labour Direct Labour Hours
A-141
A-142
A-143
A-144
$100,000
81,000
90,000
150,000
$220,000
190,000
205,000
290,250
1,200
1,000
1,100
1,800
iv) Issued indirect materials to production, $80,000
v) Charged indirect manufacturing wages to production, $159,750
vi) Depreciation expense on factory equipment used on the different jobs, $300,000
vii) Other overhead costs incurred on jobs A-141 to A-144 amounted to $112,750
viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate.
ix) Finished Jobs A-141 - A-143 and transferred to the finished goods inventory account
✗) Shipped Job A-141 and A-142 and billed customers at a margin of 25% on cost.
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Transcribed Image Text:PART 1 (25 marks) Aubergine is a manufacturer of contemporary cases for tablets. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it applies manufacturing overhead based on direct labour hours. Any overhead variance is deemed to be immaterial and therefore closed out to Cost of Goods Sold. Aubergine's pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads Total estimated direct labour hours $4,200,000 35,000 During the first month of 2024, the business recorded the following transactions. Purchased $500,000 worth of materials on account. Separately, Aubergine paid a $3,540 bill for freight in. ii) Incurred manufacturing wages of $1,065,000 iii) Issued direct materials and used direct labour in manufacturing Job # Direct Materials Direct Labour Direct Labour Hours A-141 A-142 A-143 A-144 $100,000 81,000 90,000 150,000 $220,000 190,000 205,000 290,250 1,200 1,000 1,100 1,800 iv) Issued indirect materials to production, $80,000 v) Charged indirect manufacturing wages to production, $159,750 vi) Depreciation expense on factory equipment used on the different jobs, $300,000 vii) Other overhead costs incurred on jobs A-141 to A-144 amounted to $112,750 viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate. ix) Finished Jobs A-141 - A-143 and transferred to the finished goods inventory account ✗) Shipped Job A-141 and A-142 and billed customers at a margin of 25% on cost.
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