Question

Bodin Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the following inventories at the beginning and end of the month of January.
January 1 January 31
Finished goods $126,000 $117,000
Work in process 235,000 251,000
Raw material 134,000 124,000
The following additional data pertain to January operations.
Raw material purchased $190,000
Direct labor 400,000
Actual manufacturing overhead 170,000
Actual selling and administrative expenses 115,000
The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost. Any overapplied or underapplied manufacturing overhead is accumulated until the end of the year.
Required:
1. Compute the company's prime cost for January.
2. Compute the total manufacturing cost for January.
3. Compute the cost of goods manufactured for January.
4. Compute the cost of goods sold for January.
5. Compute the balance in the manufacturing overhead account on January 31.

Answer 1

Answer:

1. Prime Costs  $ 600,000

2. Total Manufacturing Costs $ 770,000

3. Cost of goods manufactured $ 754,000

4. Cost of Goods Sold $ 763,000

5: Over applied Overhead=  $ 70,000

Explanation:

Add ing Direct Materials and Direct Labor gives Prime Costs.

Bodin Company

January 1 Raw material 134,000

Add Raw material purchased $190,000

Less January 31 Raw material 124,000

Direct Materials Used $ 200,000

Direct labor 400,000

1.Prime Costs  $ 600,000

Actual manufacturing overhead 170,000

2. Total Manufacturing Costs $ 770,000

Adding Prime Costs to the Actual Manufacturing Overhead gives Total Manufacturing Costs.

2. Total Manufacturing Costs $ 770,000

Add January 1 Work in process 235,000

Cost of Goods Available for Manufacture $ 1005,000

Less January 31 Work in process  251,000

3. Cost of goods manufactured $ 754,000

Adding Opening Work in Process to Total Manufacturing Costs   and Subtracting Closing Work in Process  from Total Manufacturing Costs  the gives Cost of goods manufactured .

3. Cost of goods manufactured $ 754,000

Add January 1 Finished goods $126,000

Cost of Goods Available for Sale $ 880,000

Less January 31 Finished goods  $117,000

4. Cost of Goods Sold $ 763,000

Adding Opening Finished goods to Cost of Goods Manufactured   and Subtracting Closing Finished goods from Cost of Goods Manufactured  the gives Cost of goods sold .

Applied Manufacturing Overhead= 60% of 400,000= $ 240,000

Actual Overhead $ 170,000

5: Over applied Overhead= Applied Overhead Less Actual Overhead

                                     = 240,000- 170,000= $ 70,000

           Overheads            

Debit                                    Credit

Actual                        Applied $240,000

$ 170,000

Over Applied

$ 70,000                                                            

$ 240,000                                   $ 240,000