Part A

Sim Lim Company has the following closing balances for the year ended December 30, 2020.

Direct materials $15,000 Dr Work-in-Process $34,500 Dr Finished Goods $49,500 Dr Cost of Goods Sold $74,500 Dr

Additional information is as follows:

Cost of materials purchased during 2020 $41,000 Cost of direct materials used in production during 2020 $47,000 Cost of direct labour used in production during 2020 $40,000 Cost of goods completed during 2020 $102,000 Factory overhead allocated to production during 2020 $48,000

Required:

1. Compute the opening balance of Work-in-Process. (2 marks)
2. Compute the opening balance of Finished Goods. (2 marks)
3. Discuss what you can observe about the flow of costs at Sim Lim Company. (4 marks)

Part B

MK Company has just finished its first year of operations. MK used a budgeted overhead rate to allocate manufacturing overhead to products. Actual manufacturing overhead incurred was $425,000 and $435,000 of overhead was allocated to Work-in-Process.

Budgeted manufacturing overhead was $465,000. Ending balances in the relevant accounts were:

Work-in-Process	$40,000
Finished Goods	$80,000
Cost of Goods Sold	$680,000

Required:

1. Compute the amount of underallocated or overallocated overhead. (2 marks)
2. Explain why MK Companys underallocated or overallocated overhead has occurred and the options to dispose of it. (5 marks Please help me thank you