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Cost Accounting

H & R Manufacturing Corporation provided the following cost data for its most recent fiscal year end. The company manufactured 100,000 units of its product during the past fiscal year.

Beginning work-in-process inventory $70,000
Ending work-in-process inventory 90,000
Beginning finished goods inventory 124,000
Ending finished goods inventory 100,000

Total manufacturing costs 700,000

a) Compute the cost of goods manufactured during the year
b) Compute the cost of goods sold for the year
c) Why would your answers to (a) and (b) be different?

The president of Brooklyn Brewers forecasts the company will incur $1,000,000 of
manufacturing overhead in the coming year. The company also expects the following results for its operations in the coming year:

Direct labor hours 100,000
Direct labor cost $2,000,000
Machine hours 20,000

Compute overhead allocation rates based on the following bases

a) Direct labor hours
b) Direct labor cost
c) Machine hours
d) If the company decides to use direct labor hours as it basis for overhead allocation, how much overhead would be allocated to a product that requires 25,000 hours of direct labor?

Melbourne Industries reported the following data about its production process for the current month:

Cost of beginning work-in-process $60,000
Total manufacturing cost 700,000
Units completed 30,000
Units in-process (40% complete) 20,000

a) Compute the equivalent units of production for the month
b) Compute the average cost per unit

For each of the products listed, only indicate whether a job order costing system or a process costing system would be most appropriate.

a) Fuel oil
b) Wedding invitations
c) Dog food
d) Custom window molding
e) Billboard advertising
f) Bread
g) Personal computer
h) Music CD

Solution Preview

Beginning work-in-process inventory $70,000
Ending work-in-process inventory 90,000
Beginning finished goods inventory 124,000
Ending finished goods inventory 100,000

Total manufacturing costs 700,000

a) Compute the cost of goods manufactured during the year

Cost of Goods Manufactured = Beginning Work in process inventory + manufacturing costs - ending work in process inventory
Cost of goods manufactured = 70,000+700,000-90,000=680,000

b) Compute the cost of goods sold for the year

Cost of goods sold = beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory
Cost of goods sold = 124,000+680,000-100,000=704,000

c) Why would your answers to (a) and (b) be different?

The answers would be different since cost of goods manufactured gives the total value of finaihed goods ...

Solution Summary

The posting has solutions to various cost accounting problems.

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