Potras Co & Garber: cost of raw material, unused capacity
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Question 8:
The following data are for Potras Company:
Beginning Ending
Finished goods inventory $41,000 $51,000
Work in process inventory $31,000 $24,000
Raw materials inventory $32,000 $37,000
Purchases of raw materials $84,000
Factory depreciation $6,200
Other factory costs $11,200
Direct labor $27,000
Indirect labor $6,900
Selling expense $13,800
Underapplied or overapplied overhead $0
The cost of raw materials used in production was:
$89,000
$84,000
$54,000
$79,000
________________________________________
Question 9:
(Appendix 3A) At the beginning of the current year, Garber Corporation estimated that its manufacturing overhead would be $532,000 and the activity level would be 23,000 machine-hours. The level of activity at capacity is 40,000 machine-hours. The actual manufacturing overhead for the year was $504,900 and the actual level of activity was 23,100 machine-hours.
Assume for the purposes of this question only that the actual manufacturing overhead for the year was $532,000 and was entirely fixed. If the company bases its predetermined overhead rate on machine-hours at capacity, then the cost of unused capacity reported on the income statement would have been:
$16,900
$224,770
$201,670
$219,430
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Show how to work out the cost of raw material and cost of unused capacity
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Q 8:
Cost of raw materials used in production=Begining raw material inventory + ...
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