Accounting Exam Review help... thanks

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M

MikeMike

Lifer
Feb 6, 2000
45,885
66
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using job costing system...

on Jan 1 they have
Work In progress of $62,000

During the year, materials requisitioned for use amounted to $110000, of which $79,000 represented direct materials..
Factory wages for the period were $242000, of which $199,000 were for direct labor.
Manufacturing overhead is allocated on the basis of 80% of direct labor cost.
Actual overhead cost for the year was $125000
Jobs Costing $350,000 were completed during the year.

The December 31 work in process inventory balance is?

the answer is $149,200
but i have yet to figure out what gets me that number...
 
Last edited:
GoodRevrnd

GoodRevrnd

Diamond Member
Dec 27, 2001
6,801
581
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How sure are you of answer? I don't remember so good from budgeting class, but I get:

MatUsed (DM?) + DL + MOH = MfgCosts
BegWIP + MfgCosts - EndWIP = COGM
EndWIP = $449,200
 
Last edited:
M

MikeMike

Lifer
Feb 6, 2000
45,885
66
91
GoodRevrnd said:
How sure are you of answer? I don't remember so good from budgeting class, but I get:

MatUsed (DM?) + DL + MOH = MfgCosts
BegWIP + MfgCosts - EndWIP = COGM
EndWIP = $449,200
Click to expand...

sure enough that its the answer given online by the accounting program we use...

your math is off, and honestly gives $115,000, which IS another possible answer, but not the "right" one...
 
Last edited:
J

JJChicken

Diamond Member
Apr 9, 2007
6,165
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81
MikeMike said:
bump? exam in 3 hours, jsut trying to figure this question out.
Click to expand...

Didn't boomer send you a PM?

Anyways, I think the answer is wrong. This is a pretty simple question.

WIP = Beginning + Manufacturing for the year - units transferred out

Manufacturing for the year = direct materials + direct labour + manufacturing overhead (I think? It's been a while since I did this stuff)
 
M

MikeMike

Lifer
Feb 6, 2000
45,885
66
91
Barack Obama said:
Didn't boomer send you a PM?

Anyways, I think the answer is wrong. This is a pretty simple question.

WIP = Beginning + Manufacturing for the year - units transferred out

Manufacturing for the year = direct materials + direct labour + manufacturing overhead (I think? It's been a while since I did this stuff)
Click to expand...

his number (reading his "spreadsheet" properly) seems to be $30k...
 
J

JJChicken

Diamond Member
Apr 9, 2007
6,165
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81
COST OF GOODS MANUFACTURED
The cost of goods manufactured statement combines all the direct materials, direct labor and factory with beginning work in process inventory, minus the ending work in process inventory, to report the total cost of the goods which have been manufactured during the period. In order to prepare the statement, a manufacturing summary is debited for all the costs during the year, and credited for the cost of goods manufactured and ending inventories. The cost of goods manufactured is added to finished goods inventory to sum to the goods available for sale, which gives the cost of goods sold when ending finished inventory is deducted.

^^^ I did a quick google search and got that.
 
M

MikeMike

Lifer
Feb 6, 2000
45,885
66
91
Barack Obama said:
COST OF GOODS MANUFACTURED
The cost of goods manufactured statement combines all the direct materials, direct labor and factory with beginning work in process inventory, minus the ending work in process inventory, to report the total cost of the goods which have been manufactured during the period. In order to prepare the statement, a manufacturing summary is debited for all the costs during the year, and credited for the cost of goods manufactured and ending inventories. The cost of goods manufactured is added to finished goods inventory to sum to the goods available for sale, which gives the cost of goods sold when ending finished inventory is deducted.

^^^ I did a quick google search and got that.
Click to expand...

i know that...

here is a screenshot (copying isnt allowed) of the question, with the "$149,200" shown as a green check (aka correct, also verifiable by having 1 question answered correctly, aka the only question i answered this time through)

Picture2-2.png
 
J

JJChicken

Diamond Member
Apr 9, 2007
6,165
16
81
EDIT: Your OP has the wrong jobs transfered out number ><. I've updated.

Okay, I brushed off my Chartered Accountant notes. This is what I got:

Two costing systems: Actual (uses actual overhead rates) & Normal (fixed overhead rates). Normal costing is typically applied to process costing systems because the processes are more repetitive. However, we're given that manufacturing overhead is allocated based off 80&#37; labour, so I think we can presume a normal costing system. If this sentence was not there, I would advise you to use actual overhead rates (since we are looking at a job costing system).

Beginning work in progress (01.01) = $62,000

Direct Materials used = $79,000
Direct Labour used = $199,000
Manufacturing (Direct) Overhead = 0.8 x D.L. = 0.8 * 199,000 = 159,200

Units transferred out = $350,000

Therefore, Ending WIP (12.31) = 149,200 (as required).

I'm fairly certain with this answer, since I read all the relevant points from my studies. Read the below about manufacturing overhead, it explains why we disregard the remaining indirect materials/wages/actual overhead from our calculation:

Manufacturing overhead (also known as factory overhead, factory burden, production overhead) involves a company&#8217;s factory operations. It includes the costs incurred in the factory other than the costs of direct materials and direct labor. This is the reason that manufacturing overhead is often classified as an indirect product cost.

Generally accepted accounting principles require that cost of direct material cost, direct labor, and manufacturing overhead be considered as the cost of products for valuing inventory and for determining the cost of goods sold.
 
M

MikeMike

Lifer
Feb 6, 2000
45,885
66
91
I got the answer finally...

it's
Manuf Overhead = DL *.8
159,200 = 199000 * .8
WIP Beg + DM + DL + Manuf Overhead - Completed = 149,200
62000 + 79000 + 199000 + 159200 - 350000
the .8 was screwing me hard.
 
SandEagle

SandEagle

Lifer
Aug 4, 2007
16,809
13
0
ATOT isnt your personal tutor. i didnt have internet when i took accounting years ago. kids these days are lazy and dont want to work hard anymore. i hope u fail.







j/k. dont fvck up and good luck
 
GuitarDaddy

GuitarDaddy

Lifer
Nov 9, 2004
11,465
1
0
Beg WIP 62,000
Add dir mat'l 79,000
Add dir labor 199,000
Add O/H 159,200 (199,000 x 80&#37;)
Sub cost of sales (350,000)

Ending WIP 149,200



Opps, see you already figured it out
 
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