1.Classic Sound is a start-up company that produces vinyl records for numerous record labels worldwide. The company has two full-time employees working in the production department while the CEO splits her time 80/20% between developing new business and overseeing the production process. Information taken from the accounting records for the first three months of operations is shown below.

Beginning raw materials inventory	$	0
Purchases of raw materials		55,000
Ending raw materials inventory		27,500
Direct labour		44,500
Manufacturing overhead		33,500
Beginning work in process inventory		0
Ending work in process inventory		6,000
Purchase of production equipment		150,000
Rent for production facility		10,500

Required:

1. Prepare a schedule of cost of goods manufactured for the company for the month. (Do not leave any empty spaces; input a 0 wherever it is required.)

CLASSIC SOUND
Schedule of Cost of Goods Manufactured
For the Quarter Ended xxx
Direct materials:
	0
Raw materials used in production		$0
Total manufacturing costs		0
		0
Cost of goods manufactured		$0

2. What types of expenses are likely included in the total manufacturing overhead cost of $33,500 incurred for the first three months of operation? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Selling expenseunanswered

• Administrative expenseunanswered
• Ending work in process inventoryunanswered
• Rent for the production facilityunanswered
• Depreciation on the production equipmentunanswered
• Insurance on the production equipmentunanswered
• Indirect materials used in producing recordsunanswered
• Indirect labour related to the CEO's supervision of the production process (20% of her time).unanswered

2. Jan Davis is employed by Wesley Limited. Last week she worked 50 hours assembling one of the companys products. Wesleys employees work a 40-hour week and Davis is paid $22 per hour. Employees are paid time and a half for any hours worked in excess of the standard 40 hours. Assume the overtime is the result of an overall increase in demand for all products.

Required:

1. Allocate Daviss wages for the week between direct labour cost and manufacturing overhead cost.

Direct labour cost?

Manufacturing overhead cost?

Total wages earned?

2. How would your answer to part (1) have changed if the overtime was incurred to meet a rush order for a particular customer?

Had the overtime been incurred to meet a rush order for a particular client then

?

would have been treated as a direct labour.

3. Now assume that in a different 40-hour week, Davis had 32 hours where she was actually working but was idle 8 hours due to scheduled maintenance on the production equipment. Allocate Daviss wages for the week between direct labour cost and manufacturing overhead cost.

Direct labour cost?

Manufacturing overhead cost ?

Total wages earned ?