Total Manufacturing Costs and Work in Process Account
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Russell Manufacturing Company developed the following data:
Beginning work in process inventory
$180,000
Direct materials used
140,000
Actual overhead
220,000
Overhead applied
160,000
Cost of goods manufactured
240,000
Ending work in process
300,000
Russell Manufacturing Company's total manufacturing costs for the period is
$360,000.
$260,000.
$380,000.
cannot be determined from the data provided.
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Solution Summary
The missing amount problem are always so tough! This solution gives the student the T account cost flows model so that they can insert the amounts (this is done for them) and see what is missing. Discussion is over two pages (641 words) on how this all works including explaining the predetermined overhead rate.
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Your response is attached.
Russell Manufacturing Company developed the following data:
Beginning work in process inventory
$180,000
Direct materials used
140,000
Actual overhead
220,000
Overhead applied
160,000
Cost of goods manufactured
240,000
Ending work in process
300,000
Russell Manufacturing Company's total manufacturing costs for the period is
$360,000.
$260,000.
$380,000.
cannot be determined from the data provided.
Response:
This requires that you know two major ideas, the flow of costs and how predetermined overhead rates work.
Let's look at the flow of costs first:
You have a food chain of inventories! Raw Materials is an ingredient in WIP. WIP replenishes FG. Sales deplete FG resulting in COGS. When WIP feeds FG, this is the "Cost of Goods Manufactured" stage. It helps to visualize the flow in T accounts:
Raw Materials Work In Process Finished Goods COGS
_______________________ ____________________ __________________ _______________
Beg Bal. Beg Bal. Beg Bal.
Purchases RM used ...
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