Babbel Company - job-order costing
Not what you're looking for?
Babbel Company is a manufacturing firm that uses the job-order costing. The company's inventory balances were as follows the the beginning of the year
Beginning Balance Ending Balance
Raw material $21,000 $24,000
Work in process $40,000 $22,000
Finish goods $26,000 $41,000
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 38,000 machine-hours and incur $266,00 in manufacturing overhead cost. The following transactions were recorded for the year:
(a) Raw materials were purchased, $300,000.
(b) Raw materials were requisitioned for use in production., $297,000(281,000 direct and $16,000 indirect).
(c) The following employee costs were incurred: direct labor, $389,000; indirect labor, $62,000; and administrative salaries, $176,000.
(d) Selling costs, $160,000
(e) Factory utility costs, $19,000
(f) Depreciation for the year was $143,000 of which $137,000 is related to factory operations and $6,000 is related to selling, general, and administrative activities.
Manufacturing overhead was applied to jobs. The actual level of acitivity for the year was 34,000 machine-hours.
Sales for the year totaled $1,238,000
1. Prepared a schedule of cost of goods manufactured in good form.
2. Was overhead underapplied or overapplied? By how much?
3. Prepare an income statement for the year in good form. The company closes any underapplied or overapplied overhead to Cost of Goods Sold.
Purchase this Solution
Solution Summary
The solution provides t-accounts and then a schedule in "good form" to compute the required amounts. The cells are "linked" so that if you change the data, the computations update. This provides a nice template to help you see how to sort direct, indirect and non-manufacturing costs into their proper places so that your computations of cost of goods manufactured, cost of goods sold (adjusted for over- or under-applied, and operating income are correct.
Solution Preview
The solution provides t-accounts and then a schedule in "good form" to compute the required amounts. The cells ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Basics of corporate finance
These questions will test you on your knowledge of finance.