Oscar Corp. applies manufacturing overhead to production at 150% of direct labor cost. During 20x5, manufacturing overhead of $180,000 was applied to production; actual manufacturing overhead was $199,000. Beginning Work in Process Inventory was $20,000 and ending Work in Process Inventory was $24,000. Beginning Finished Goods Inventory was $42,000, ending Finished Goods Inventory was $39,000. Sales for 20x5 were $580,000, yielding a $117,000 gross profit.
Complete the following schedule:
1. Direct Materials used in production.
2. Direct Labor.
3. Manufacturing Overhead Applied.
4. Current Manufacturing Costs.
a. beginning work in process inventory.
b. ending work in process inventory.
5. Costs of Goods Manufacturing.
a. beginning finished goods inventory.
b. ending finished goods inventory.
6. Unadjusted cost of goods sold.
7. Overhead Adjusted
8. Adjusted cost of goods sold
To complete the given schedule, we need to calculate the following values:
1. Direct Materials used in production:
To calculate the direct materials used in production, we need to know the change in raw materials inventory. Unfortunately, the information about raw materials inventory is not provided in the question. Assuming no change in raw materials inventory, we can calculate the direct materials used by using the following formula:
Direct Materials Used = Beginning Raw Materials Inventory + Purchases - Ending Raw Materials Inventory
2. Direct Labor:
The direct labor cost is not given directly, so we need to use the information provided to calculate it indirectly. Since manufacturing overhead is applied to production at 150% of direct labor cost, we can calculate the direct labor cost using the following formula:
Direct Labor Cost = Manufacturing Overhead Applied / 150%
3. Manufacturing Overhead Applied:
Manufacturing overhead applied is given as $180,000.
4. Current Manufacturing Costs:
a. Beginning Work in Process Inventory: Given as $20,000.
b. Ending Work in Process Inventory: Given as $24,000.
5. Cost of Goods Manufactured:
a. Beginning Finished Goods Inventory: Given as $42,000.
b. Ending Finished Goods Inventory: Given as $39,000.
6. Unadjusted Cost of Goods Sold:
To calculate the unadjusted cost of goods sold, we need to know the cost of goods manufactured. The formula to calculate the unadjusted cost of goods sold is as follows:
Unadjusted Cost of Goods Sold = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory
7. Overhead Adjusted:
To calculate the overhead adjusted cost of goods sold, we need to subtract the difference between actual manufacturing overhead and applied manufacturing overhead from the unadjusted cost of goods sold. The formula is as follows:
Overhead Adjusted = Unadjusted Cost of Goods Sold + (Actual Manufacturing Overhead - Applied Manufacturing Overhead)
8. Adjusted Cost of Goods Sold:
The adjusted cost of goods sold is the Gross Profit ($117,000) subtracted from the Overhead Adjusted. The formula is as follows:
Adjusted Cost of Goods Sold = Overhead Adjusted - Gross Profit
By using these formulas and the given information, you can calculate all the values in the schedule.