(solution) Prepare a cost of goods sold schedule for the quarter.

(solution) Prepare a cost of goods sold schedule for the quarter.

Prepare a cost of goods sold schedule for the quarter.

ACC00146 ? 2016 S2
ASSIGNMENT 1 (20 marks)
QUESTION 1 (5 MARKS)
You have been employed as an entry-level management accountant for a little under a
year. You suspect that your immediate supervisor is involved in a significant fraud
involving diverting of company assets to personal use. Briefly discuss the steps you
might take to resolve this dilemma and use a real world example (not hypothetical) to
support your discussion.
Question 2 (5 MARKS)
Lismore Manufacturing Company had the following account balances for the quarter
ending March 31, unless otherwise noted:
Work-in-process inventory (January 1)
$ 140,400
Work-in-process inventory (March 31)
171,000
Finished goods inventory (January 1)
540,000
Finished goods inventory (March 31)
510,000
Direct materials used
378,000
Indirect materials used
84,000
Direct manufacturing labor
480,000
Indirect manufacturing labor
186,000
Property taxes on manufacturing plant building 28,800
Salespersons' company vehicle costs
12,000
Depreciation of manufacturing equipment
264,000
Depreciation of office equipment
123,600
Miscellaneous plant overhead
135,000
Plant utilities
92,400
General office expenses
305,400
Marketing distribution costs
30,000
Required:
a.
b.
c.
d. Prepare a cost of goods manufactured schedule for the quarter. (1 mark)
Prepare a cost of goods sold schedule for the quarter. (1 mark)
Indentify inventoriable and period costs. (1 mark)
Of what value is the schedule of cost of goods manufactured? How does it tie into
the income statement? Discuss and use examples to support your discussion. (2
marks) Question 3 (5 MARKS)
The Dougherty Furniture Company manufactures tables. In March, the two production
departments had budgeted allocation bases of 4,000 machine-hours in Department 100
and 8,000 direct manufacturing labor-hours in Department 200. The budgeted
manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job
A, the actual costs incurred in the two departments were as follows:
Department 100 Department 200
Direct materials purchased on account $110,000
$177,500
Direct materials used
32,500
13,500
Direct manufacturing labor
52,500
53,500
Indirect manufacturing labor
11,000
9,000
Indirect materials used
7,500
4,750
Lease on equipment
16,250
3,750
Utilities
1,000
1,250
Job A incurred 800 machine-hours in Department 100 and 300 manufacturing labor-hours
in Department 200. The company uses a budgeted overhead rate for applying overhead to
production.
Required:
a. Determine the budgeted manufacturing overhead rate for each department. (1 mark)
b. Prepare the necessary journal entries to summarize the March transactions for
Department 100. (2 marks)
c. What is the total cost of Job A? (1 mark)
d. What factors should be considered in selecting an allocation base to be used in
computing the budgeted overhead rate? Discuss and use examples to support your
discussion. (1 mark)
Question 4 (5 MARKS)
a. Silver Spoon Incorporated is a manufacturer of kitchen utensils. It produces all of its
products in one department. The information for the current month is as follows:
Beginning work in process
Units started
Units completed
Ending work in process
Spoilage
Beginning work-in-process direct materials
Beginning work-in-process conversion
Direct materials added during month
Direct manufacturing labor during month 37,500 units
55,000 units
75,000 units
14,500 units
3,000 units
$25,000
$ 10,000
$113,750
$40,020 Beginning work in process was 25% complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to
37.5% of direct manufacturing labor. Ending work in process was 60% complete. All
spoilage is normal and is detected at the end of the process.
Required:
a. Prepare a production cost worksheet if spoilage is recognized and the
weighted-average method is used. (3 marks)
b. Why is cost accumulation easier under a process costing system than under a
job order costing system? Discuss and use examples to support your
discussion. (2 marks)
THE END