# 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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