Exercise 4-21

Drew Corp. designs and manufactures mascot uniforms for high school, college, and professional sports teams. Since each teams uniform is unique in color and design, Drew uses a job order costing system. On January 1, the T-accounts for some of Drews primary balance sheet accounts were as follows:

Raw Materials Inventory

Work in Process Inventory

Beg.

15,000

Beg.

31,000

Accounts Receivable

Accounts Payable

Beg.

56,000

Beg.

42,000

Finished Goods

Cash

Beg.

22,000

Beg.

32,000

During the year, the following events occurred:

1.	Drew purchased raw materials costing $86,000 on account.
2.	Drew used $93,000 of raw materials in production. Of these, 70% were classified as direct materials and 30% as indirect materials. (Drew maintains a single Raw Materials Inventory account.)
3.	Drew used 31,200 hours of direct labor. The companys average direct labor rate was $7.50 per hour (credit Wages Payable).
4.	The companys only indirect labor cost was the salary of a security guard hired to watch the companys shop after hours. The guards annual salary was $25,000 (credit Wages Payable).
5.	Other manufacturing overhead costs the company incurred on account totaled $70,000.
6.	Drew applied $130,000 in manufacturing overhead.
7.	The company completed production of goods costing $326,000.
8.	The companys Cost of Goods Sold balance was $303,750 before adjusting for over- or underapplied overhead.
9.	Sales revenue was $425,000 (all sales were made on account).
10.	Drew collected $450,000 from customers.
11.	The company paid accounts payable of $100,000.
12.	At year-end, all wages earned during the year had been paid.

(a)	Calculate under- or overapplied overhead for the year. (Round answer to 0 decimal places, e.g. 5,275.)

(b)	Assuming that Drew closes under- or overapplied overhead to Cost of Goods Sold, calculate the cost of goods sold for the year.

(c)	Assuming that Drew prorates under- or overapplied overhead to the appropriate accounts, calculate the adjusted Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold balances for the year. (Round % of total and final answers to 2 decimal places, e.g. 52.75% or 52.75.)