Raptor Company reported the following actual costs data for the year: Purchase of raw materials (all direct)
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Question:
Raptor Company reported the following actual costs data for the year:
Purchase of raw materials (all direct) | $200,000 |
Direct labour (average hourly rate of $25) | 400,000 |
Manufacturing overhead costs | 100,000 |
Change in inventories: | |
Increase in raw materials | $25,000 |
Increase in work in process | 16,000 |
Increase in finished goods | 30,000 |
Raptor Company used a predetermined overhead rate based on direct labour hours. Estimated annual manufacturing overhead cost and direct labour hours were $150,000 and 20,000, respectively.
Required:
- What was the pre-determined manufacturing overhead rate?
- Calculate the cost of goods manufactured.
- What was the cost of goods sold before adjusting for any under or overapplied overhead?
- By how much was manufacturing overhead cost under or overapplied?
- Do a summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold. Is such an entry appropriate in this situation? Why or why not?
- Analyze the under or overapplied manufacturing overhead costs calculated in part 3 above into two separate components: amount due to incorrect estimate of the annual manufacturing overhead costs and an amount due to incorrect estimate of the annual direct labour cost.
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