Applying manufacturing overhead
Related Topics
BYC Manufacturing Company produces many different items for construction companies. Information as at December 31, 2017 (the fiscal year end) is as follows:
Additional Information Produced:
1. Cost of Goods Sold during the year equaled $875,000. Cost of Goods Manufactured during the year was $400,000.
2. Manufacturing overhead is applied based on machine operating hours. During
2017, there were 80,000 machine operating hours, compared to a budgeted 90,000
machine operating hours.
3. Total overhead costs for the company during the 2017 year included:
CEO Salary $ 400,000
Factory Depreciation $ 60,000
Factory Utilities $ 30,000
Marketing and Advertising $ 50,000
Factory Insurance $ 40,000
Office Salaries $ 300,000
Machine Repairs $ 20,000
4. BYC budgeted for $ 800,000 in manufacturing overhead during the year.
5. Employees are paid $25 per hour, with a total of 70,000 labour hours incurred during the year. 25,000 of these labour hours were indirect.
6. BYC made $600,000 in payments towards account payable accounts. Assume the accounts payable is used only for direct material purchases.
7. Cranes represented 3.25 of the ending inventory cost of the Tractors, and the Dump trucks represent 1.4 times the ending inventory balance of the tractors.
Requirement #1: Calculate the amount of under/over-applied manufacturing overhead for
the year. Is it over or under applied? Round interim answers to two decimal places.
Requirement #2: Calculate the adjusted work-in-process, finished goods, and cost of
goods sold balances for the 2017 fiscal year based on the over/under allocated
manufacturing overhead, calculated in part 1 above.