Question
Cost flows and overhead application (LO4, LO5). Baber, Inc., manufactures custom scaffolding used in construction projects. The following data pertain to its operations for the
Cost flows and overhead application (LO4, LO5). Baber, Inc., manufactures custom scaffolding used in construction projects. The following data pertain to its operations for the most recent year:
Direct materials beginning inventory $23,000
Direct materials ending inventory $42,000
WIP beginning inventory $98,500
WIP ending inventory $76,400
Finished goods beginning inventory $124,350
Finished goods ending inventory $138,750
Raw materials purchased $190,000
Direct labor cost $145,000
Selling and administration expenses $87,600
Revenues $694,740
You also know that Baber, Inc., uses two allocation bases to charge overhead to products. It calculates a rate of 20% of materials cost for materials-related overhead. The rate
for all other manufacturing overhead is 150% of direct labor cost.
Required:
a. Calculate the cost of direct materials issued to WIP during the year.
b. Calculate the cost of manufacturing overhead charged to production.
c. Calculate the cost of goods manufactured during the year.
d. Calculate the cost of goods sold during the year.
e. A GAAP income statement.
f. For a particular custom truss, Baber informs you that it incurred $7,800 for direct materials costs and $12,300 for direct labor costs. What is the inventoriable cost of this truss?
g. Comment on whether the value of the units as reported in the ending inventory account is a good estimate of the products' costs for decisions such as setting pricing.
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