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ACCT/386 ACCT386 ACCT 386 Week 2 Homework 2

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ACCT 386 Week 2 Homework 2 There may be chances that the figures given in our question and your question doesn’t matches. Don’t worry, we are here to help you. Just write to us at studentwhiz@gmail.com and your answer is with you in no time. Question 1 Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Computer-hours 87,000 Fixed manufacturing overhead cost $ 1,279,000 Variable manufacturing overhead per computer-hour $ 3.60 During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: Computer-hours 50,000 Manufacturing overhead cost $ 970,000 Inventories at year-end: Raw materials $ 420,000 Work in process $ 190,000 Finished goods $ 1,030,000 Cost of goods sold $ 2,800,000 Question 2 Valenko Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $ 212,000 Purchases of raw materials $ 263,000 Direct labor ? Administrative expenses $ 150,000 Manufacturing overhead applied to work in process $ 337,000 Total actual manufacturing overhead costs $ 356,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 60,000 $ 36,000 Work in process ? $ 28,000 Finished goods $ 31,000 ? The total manufacturing costs for the year were $670,000; the cost of goods available for sale totaled $730,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $39,000. The company’s overapplied or underapplied overhead is closed entirely to cost of goods sold. Question 3 Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $243,200 of manufacturing overhead for an estimated allocation base of $152,000 direct material dollars. The following transactions took place during the year (all purchases and services were acquired on account): a. Raw materials purchased, $145,000. b. Raw materials requisitioned for use in production (all direct materials), $143,000. c. Utility bills incurred in the factory, $22,000. d. Costs for salaries and wages were incurred as follows: Direct labor $ 216,000 Indirect labor $ 90,200 Selling and administrative salaries $ 142,000 e. Maintenance costs incurred in the factory, $23,000. f. Advertising costs incurred, $121,000. g. Depreciation recorded for the year, $43,000 (70% relates to factory assets, and the remainder relates to selling and administrative assets). h. Rental cost incurred on buildings, $85,000 (80% of the space is occupied by the factory, and 20% is occupied by sales and administration). i. Miscellaneous selling and administrative costs incurred, $13,000. j. Manufacturing overhead cost was applied to jobs, $ ? k. Cost of goods manufactured for the year, $557,000. l. Sales for the year (all on account) totaled $1,300,000. These goods cost $510,000 according to their job cost sheets.

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