Buck & Company incurred the following costs during August:

Raw materials purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,140

Direct labor ($12.50 per hour) . . . . . . . . . . . . . . . . . . . . . . . . 57,500

Manufacturing overhead (actual) . . . . . . . . . . . . . . . . . . . . . 90,300

Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,800

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,700

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400

Manufacturing overhead is applied on the basis of $20 per direct labor hour. Assume that overapplied or underapplied overhead is transferred to cost of goods sold only at the end of the year. During the month, 4,200 units of product were manufactured and 4,400 units of product were sold. On August 1 and August 31, Buck & Company carried the following inventory balances:

Required:
a. Prepare a statement of cost of goods manufactured for the month of August and calculate the average cost per unit of product manufactured.
b. Calculate the cost of goods sold during August.
c. Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the financial statements?
d. (Optional) Prepare a traditional (absorption) income statement for Buck & Company for the month of August. Assume that sales for the month were $272,800 and the company’s effective income tax rate was34%.

Transcribed Image Text:

August 1 August 31 19,600 $17,900 57,400 32,700 Raw materials... in process 53,200