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Highview Corp. applies manufacturing overhead to production at 120% of direct labor cost. During 2015, manufacturing overhead of $94,560 was applied to production, actual manufacturing overhead was $109,100. Beginning Work in Process inventory was $13,200 and beginning Finished Goods inventory was $37,000. Work in Process inventory increased by 25% during the year and Finished Goods inventory decreased by 10% during the year. Sales for 2015 were $450,400, yielding a $129,400 gross profit. Complete the following schedule:
Expert Answer
| Answer | |||
| Item | Amount | ||
| Direct Materials Used in Production | $132,700 | ||
| Direct Labour | $78,800 | ||
| Manufacturing Overhead applied | $94,560 | ||
| Current Manufacturing Costs | $306,060 | ||
| Add : Beginning Work in process Inventory | $13,200 | ||
| Less : Ending Work in process Inventory | $16,500 | ||
| Cost of goods Manufactured | $302,760 | ||
| Add : Beginning Finished Goods Inventory | $37,000 | ||
| Less : Ending Finished Goods Inventory | $33,300 | ||
| Unadjusted Cost of goods sold | $306,460 | ||
| Overhead adjustment (underapplied) | $14,540 | ||
| Adjusted cost of goods sold | $321,000 | ||
| Adjusted Cost of goods sold = Sales – Gross profit = $450400 – $129400 = $3,21,000 | |||
| Direct Labour = Manufacturing overhead applied / 120% = $94560/120% = $78,800 | |||
| Ending work in process inventory = $13200*125% = $16,500 | |||
| Ending Finished Goods Inventory = $37000 *90% = $33,300 | |||
