Exercise $19-12$

Computing materials, labor, overhead, and cost of goods manufactured

P$1$ P$2$ P$3$ P$4$

The following information is available for ADT Company, which produces special$-$order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of $70\%$ of direct labor cost.

Inventories Beginning of Period End of Period

Raw materials $$43,000$ $$52,000$

Work in process $10,20021,300$

Finished goodes $63,00035,600$

Costs Incurred for the period

Raw materials purchases $$210,000$

Factory payroll $345,000$

Factory overhead $($actual$)$

Indirect materials used $15,000$

Indirect labor used $80,000$

Other overhead costs $120,000$

Set up a Raw Materials Inventory T$-$account and insert amounts for beginning and ending balances along with purchases and indirect materials used. Solve for direct materials used in the period.

$2.$Compute the cost of direct labor used for the period.

$3.$Set up a Work in Process Inventory T$-$account and insert amounts for beginning and ending balances along with direct materials used $($from part $1),$ direct labor used $($from part $2),$ and applied overhead. Solve for cost of goods manufactured in the period.

$4.$Set up a Finished Goods Inventory T$-$account and insert amounts for beginning and ending balances along with cost of goods manufactured $($from part $3).$ Solve for cost of goods sold in the period $($do not consider any under$-$ or overapplied overhead$).$

$5.$Set up a Factory Overhead T account and insert amounts for indirect materials used, indirect labor used, other overhead costs, and applied overhead. Solve for underapplied or overapplied overhead.