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Baab Corporation 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 $14,200 $22,000
Work in Process $27,200 $9200
Finished Goods $62,200 $77,200
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 33,200 machine-hours and incur $245,680 in manufacturing overhead cost. The following transactions were recorded for the year:
Raw materials were purchased, $315,200.
Raw materials were requisitioned for use in production, $307,200 ($280,800 direct and $26,400 indirect).
The following employee costs were incurred: direct labor, $377,200; indirect labor, $96,200; and administrative salaries, $172,200.
Selling costs, $147,200.
Factory utility costs, $10,200.
Depreciation for the year was $139,000 of which $120,400 is related to factory operations and $18,600 is related to selling, general, and administrative activities.
Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,040 machine-hours.
Sales for the year totaled $1,261,000.
Required:
do not enter any commas and round to the nearest dollar
Compute Cost of Goods Manufactured
Compute Operating Income

Respuesta :

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Answer:

1) Overhead rate = 245680/33200 = 7.4 per machine hour

2) Direct material used = 280800

3) Direct labor = 377200

4) Total manufacturing cost = 280800+377200+(34040*7.4) = $909896

5) Cost of goods manufactured = 27200+909896-9200 = $927896

6) Actual overhead = 26400+96200+10200+120400 = 253200

Applied overhead = 34040*7.4 = 251896

Under applied = 253200-251896 = 1304

Adjusted cost of goods sold = 62200+927896-77200+1304 = 914200

7) Selling and administrative = 338000

8) Operating income = 1261000-914200-338000 = 8800

Explanation:

Answer:

A.

Total Manufacturing costs based on Job order costing = Prime Costs + allocated Manufacturing overhead = $927,215

B.

Net Operating income/(loss) = -$132,200

Explanation:

Baab Corporation

Computation of Costs of Goods Manufactured:

Direct Raw Material Consumed = $280,800

Add Opening Work In Progress = $27,200

Less Closing Work in. Progress = -$9,200

Add Direct Labour = $377,200

Prime cost of production = $676,000

Overhead costs allocation is a predetermined overhead rate based on machine-hours

= $245,080 divided by 33,200 hours

= $7.38 Per machine hour.

Actual Machine hour consumed = 34,040 hours.

Therefore allocated Manufacturing overhead costs to this Job = $7.38 x 34,040 hours = $251,215.

Total Manufacturing costs based on Job order costing = Prime Costs + Manufacturing overhead = $927,215

B.

Computation of Net Income.

First we will consider what the Actual Overhead cost is, to identify if we had a savings or an undercharge from our previous workings.

Note: allocated overhead costs based on planned = $251,215

Actual overhead costs =

Factory utility costs = $147,200

Add Factory depreciation = $120,400

Add Indirect Material = $26,400

Add Indirect Labour = $96,200

Total Overhead Costs = $390,200.

This implies we undercharged and therefore our Manufacturing costs would be negatively impacted.

Meaning our Actual Manufacturing Costs = Prime Costs + Actual Manufacturing Overhead costs = $676,000 + $390,200

= $1,066,200

Having figured out what our correct Manufacturing Costs is we will now determine the Net Income.

Sales = $1,261,000

Less Opening stock of Finished Goods = -$62,200

Less Cost of goods Manufactured = -$1,066,200

Add Closing stock of Finished Goods = $73,200

Gross Profit = $205,800

Less expenses:

Administrative salaries = -$172,200

Selling costs = -$147,200

Depreciation = -$18,600

Net Operating income/(loss) = -$132,200

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