At the end of February, after the second month of operations of Able Baker Charlie Company,...

Question:

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts.

Review the data below and fill in the missing amounts on the chart for Able Baker Charlie Company.

Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values.

It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

Data for February

Decrease in materials inventory $3,300
Materials inventory on Feb. 28 50% of materials inventory on Jan. 31
Direct materials purchased $12,600
Direct materials used 3 times the direct labor incurred
Total manufacturing costs incurred in period $29,400
Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured
Total manufacturing costs incurred in period $7,000 less than Cost of Goods Sold

Account Jan. 31 Feb. 28 Costs Incurred
Materials Inventory $ $ Direct Materials Used $_
Work in Progress Inventory $27,000 $ Direct Labor Incurred $
Finished Goods Inventory $ _ $16,000 Factory Overhead Incurred $_
Cost of Goods Sold $36,400

Cost accounting

Cost accounting is a systematic approach of recording and reporting correct measurement of cost of manufecturing of goods and services. This ensures the better cost control and improve profitability.

Answer and Explanation:

Schedule of missing figures

Account Jan. 31 Feb. 28 Costs Incurred
Materials Inventory $ 6600 $ 3300 Direct Materials Used $ 15900
Work in Progress Inventory $27,000 $ 14400 Direct Labor Incurred $ 5300
Finished Goods Inventory $ 10400 $16,000 Factory Overhead Incurred $ 8200
Cost of Goods Sold $36,400
Total Manufecturing cost incurred= $ 29400
Direct labour cost= $ 15900/3= $  5300
Factory Overhead cost incurred= $ 29400-$ 15900-$ 5300= $ 8200

Working Notes

Direct Material A/c
Date Particular Dr.   $ Date Particular Cr.   $
Feb-01 Opening Balance 6600 Feb W I P  A/c 15900
feb Purchased a/c 12600
Feb-28 Closing Balance 3300
Total 19200 Total 19200
WIP A/c
Date Particular Dr.   $ Date Particular Cr.   $
Feb-01 Opening Balance 27000 Feb Finished goods a/c 42000
feb Direct material A/c 15900 (29400/70%)
Direct Labour 5300
Factory Overhead 8200
Feb-28 Closing Balance 14400
Total 56400 Total 56400
Finished Goods A/c
Date Particular Dr.   $ Date Particular Cr.   $
Feb-01 Opening Balance 10400 Feb COGS A/c 36400
Feb WIP A/c 42000
Feb-28 Closing Balance 16000
Total 52400 Total 52400


Learn more about this topic:

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The Role of Cost Accounting in Management

from NYSTCE Business and Marketing (063): Practice and Study Guide

Chapter 14 / Lesson 9
21K

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