Week 7 - Accy211 Management Accounting II Autumn Session...

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Accy211: Management Accounting II Autumn Session 2009 Solutions for self study week (Wk7) questions Questions Q2-40 Q4-41 Q6-40 2-40: (20–25 min.) Finding unknown amounts. Band Materials (1) Labor (2) Overhead (3) = 150% × (2) Total (4) As I Lay Dieing $250 $400 $600 $1,250 Ask Me Later 350 200 300 850 Total $600 $600 $900 $2,100 Let G = given, I = inferred Step 1: Use gross margin formula Case 1 Case 2 Revenues $ 32,000 G $31,800 G Cost of goods sold A 20,700 I 20,000 G Gross margin $ 11,300 G C $11,800 I Step 2: Use schedule of cost of goods manufactured formula Direct materials used $ 8,000 G $ 12,000 G Direct manufacturing labor costs 3,000 G 5,000 G Indirect manufacturing costs 7,000 G D 6,500 I Manufacturing costs incurred 18,000 I 23,500 I Add beginning work in process, 1/1 0 G 800 G Total manufacturing costs to account for 18,000 I 24,300 I Deduct ending work in process, 12/31 0 G 3,000 G Cost of goods manufactured $ 18,000 I $ 21,300 I Step 3: Use cost of goods sold formula Beginning finished goods inventory, 1/1 $ 4,000 G $ 4,000 G Cost of goods manufactured 18,000 I 21,300 I Cost of goods available for sale 22,000 I 25,300 I Ending finished goods inventory, 12/31 B 1,300 I 5,300 G Cost of goods sold $ 20,700 I $ 20,000 G For case 1, do steps 1, 2, and 3 in order. For case 2, do steps 1, 3, and then 2. 4-41: (35 min.) Job costing-service industry . 1. Tours in Process (TIP) June 30, 2009 2. Cost of Completed Tours (CCT) in June 2009 Band Materials (1) Labor (2) Overhead (3) = 150% × (2) Total (4) Grunge Express $ 400 $ 700 $1,050 $2,150 Different Strokes 475 700 1,050 2,225 Maybe Tomorrow 275 400 600 1,275 Total $1,150 $1,800 $2,700 $5,650
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3. Overhead allocated = 1.50 × 1,400 a = $2,100 Underallocated overhead = Actual overhead – Allocated overhead = $2,500 – 2,100 = $400 underallocated a Total labor in June = $100+$300+$400+$200+$400 = $1,400 4a. Underallocated overhead is written off to CCT CIP inventory remains unchanged. Account June 30, 2009 Balance (Before Proration) (1) Proration of $400 Underallocated Overhead (2) June 30, 2009 Balance (After Proration) (3) = (1) + (2) CIP $2,100 $ 0 $2,100 CCT 5,650 400 6,050 $7,750 $400 $8,150 4b. Underallocated overhead prorated based on ending balances
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Week 7 - Accy211 Management Accounting II Autumn Session...

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