The following information is for Ciena Inc. for the year ended December 31, 2010.

Of the total raw materials that Ciena Inc. placed in production for the year, \($18,000\) was for indirect materials. Assume manufacturing overhead was underapplied by \($25,000,\) resulting in an adjustment to cost of goods sold on the income statement.

Required

a. Prepare a schedule of raw materials placed in production for the year ended December 31, 2010.

b. Prepare a schedule of cost of goods manufactured for the year ended December 31; 2010:

c. Prepare a schedule of cost of goods sold for the year ended December 31, 2010.

d. Prepare an income statement for the year ending December 31, 2010. Remember to adjust cost of goods sold for any underapplied or overapplied overhead.

e. What is meant by the phrase “overhead was underapplied by \($25,000”?\) Why is this amount added to cost of goods sold?

Transcribed Image Text:

Raw Materials Inventory, beginning balance Raw Materials Inventory, ending balance Work in Process Inventory, beginning balance Work in Process Inventory, ending balance Finished Goods Inventory, beginning balance Finished Goods Inventory, ending balance Raw material purchases Direct labor used in production Manufacturing overhead applied Selling costs General and administrative Sales revenue $ 15,000 12,000 825,000 900,000 615,000 525,000 150,000 187,500 945,000 135,000 360,000 1,897,500