ACCTG 231 SPRING 2021

COMPREHENSIVE PROBLEM 1

The purpose of the comprehensive problems is to have students solve problems without a step-by-step template in which to input data. Thus, a clear and logical presentation of your solution (computations and clear identification of the items included in the computation) is part of the assignment NO credit will be given for answers without supporting, labeled computations.

Additionally, while you are welcome to discuss strategies, ideas, etc. with others, each student is required to complete their own assignment. To facilitate this, everyone will use the LAST 5 digits of their student ID as the amount of Raw Materials used in production (see highlight below). NO credit will be given for a solution that does not correspond to your ID.

Morrison Company began the year with the following balances in its inventory accounts:

• Raw Materials $ 40,000
• Work-in-Process $ 85,000
• Finished Goods $125,000

Morrison applies overhead to production using direct labor cost. As of the beginning of the year, Morrison estimated the years total manufacturing overhead to be $405,000 and total direct labor cost to be $225,000.

The following transactions occurred during the year:

a. Purchased $125,000 of raw materials on account.

b. Used $57,000 raw materials In production (use the last 5 digits of your student ID number as the dollar value of raw materials used). Of the materials used, 75% were classified as direct and 25% as indirect.

c. Incurred and paid wages and salaries of $285,000, classified as:

• Direct labor $200,000
• Indirect labor $ 85,000

d. Incurred $210,000 in various cash manufacturing overhead costs during the period.

e. Recorded $75,000 depreciation related to the companys factory.

f. Work in process totaling $620,000 was transferred to Finished Goods during the year.

g. Finished goods costing $650,000 were sold during the year.

REQUIRED (answer must be supported by clearly presented, easy to understand, computations)

1. (1 point) Compute the predetermined overhead rate used to apply MOH to production.

2. (1 point) Compute the amount of overhead applied to Work-in-Process during the year.

3. (3 points) Compute ending balances in Raw Materials, Work-in-Process and Finished

Goods.

4. (1 point) Compute over or under applied Manufacturing overhead (be sure to

indicate whether over or under applied).

5. (2 points) Prepare the entry to close under or overapplied overhead to Cost of Goods Sold.

6. (1 point) Compute adjusted Cost of Goods Sold.

7. (1 point) Clarity of supporting computations.