Question
Question 3: Cost Flows in Job Order Costing The following cost data relate to the manufacturing activities of the Kanaba Corporation last year: Manufacturing overhead
Question 3: Cost Flows in Job Order Costing
The following cost data relate to the manufacturing activities of the Kanaba Corporation last year:
Manufacturing overhead costs:
Property taxes
$1,500
Utilities, factory
2,500
Indirect labor
5,000
Depreciation, factory
12,000
Insurance, factory
3,000
Total
$24,000
Other costs incurred:
Purchases of direct materials
$16,000
Direct labor cost
$20,000
Inventories:
Direct materials, January 1
$4,000
Direct materials, December 31
$3,500
Work in process, January 1
$3,000
Work in process, December 31
$3,750
The company uses a predetermined overhead rate to apply manufacturing overhead cost to production. The rate last year was $5.00 per machine-hour; a total of 5,000 machine-hours were recorded for the year.
Required:
a. Calculate the amount of applied overhead (1 mark)
b. Compute the amount and specify underapplied or overapplied overhead cost for the year. (2 marks)
c. Prepare a schedule of Cost of Goods Manufactured for the year. Show all items. (12 marks)
Question 4: Process Costing: FIFO
Easy Incorporated uses the first-in, first-out method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.
Work in process, beginning:
Units in process
800
Percent complete with respect to materials
90%
Percent complete with respect to conversion
10%
Costs in the beginning inventory:
Materials cost
$ 1,814
Conversion cost
$ 1,406
Units started into production during the month
23,400
Units completed and transferred out
23,500
Costs added to production during the month:
Materials cost
$ 71,221
Conversion cost
$ 542,848
Work in process, ending:
Units in process
700
Percent complete with respect to materials
70%
Percent complete with respect to conversion
70%
Required:
Using the first-in, first-out method:
a. Determine the equivalent units of production for materials and conversion costs.
(6 marks)
b. Determine the cost per equivalent unit for materials and conversion costs. Round your answers to 2 decimal places. (3 marks)
c. Determine the material, conversion and total cost of ending work in process inventory. Round your final answers to the nearest whole number. (3 marks)
d. Determine the material, conversion and total cost to complete the units in beginning WIP. Round your final answers to the nearest whole number. (3 marks)
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