Explore BrainMass
Share

# Kinney, Seville, Statement of Cost of Goods Manufactured

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Both questions are correctly formatted in the two attachments. Thanks in advance for the guidance.
__________________________________

1. Kinney Industries has recently switched its method of applying manufacturing overhead from a single predetermined overhead rate based on direct labor hours to activity-based costing (ABC). Assume that the direct labor rate is \$18.00 per hour and that there were no beginning inventories. The following cost drivers and rates have been developed for allocating manufacturing overhead costs:

Activity Cost Driver Rate
Material handling Number of parts used \$2.00 per part
Assembly and inspection Number of direct labor hours \$25.00 per DLH
Testing Number of units tested \$5.00 per unit

The following production, costs, and activities occurred during the month of August:

Units Produced Direct Material Cost Number of Parts Used Direct Labor Hours
6,400 \$208,600 142,000 26,480

Required:
A) Calculate the total manufacturing cost and the cost per unit for the month of August.
B) Assume instead that Kinney Industries applies manufacturing overhead on the basis of \$40.00 per
direct labor hours (rather than the ABC method). Calculate the total manufacturing overhead cost applied for the month of August.

_______________________________
1. Seville Limited. incurred the following costs during March:

Raw materials purchased \$46,800
Direct labor (9,200 hours) 156,400
Selling expenses 47,400
Interest expense 14,800

Manufacturing overhead is applied on the basis of \$8.50 per direct labor hour. Assume that overapplied or underapplied overhead is transferred to cost of goods sold only at the end of the year. During the month, 3,500 units of product were manufactured and 3,400 units of product were sold. On March 1 and March 31, Seville carried the following inventory balances:

March 1 March 31
Raw materials \$14,200 \$15,400
Work-in-process 64,700 55,800
Finished goods 32,400 40,660

Required:
A) Prepare a Statement of Cost of Goods Manufactured for the month of March, and calculate the average cost per unit produced.
B) Calculate the cost of goods sold during March.
C) Where in the financial statements will the difference between cost of goods manufactured and cost of goods sold be classified?