Wednesday, July 17, 2019

Assignment 2: Calculating Inventory

Assignment 2 reason Inventory Finland Upholstery Inc. Oscar L. Galvan Argosy University The firms interchange and administrative expenses ar operating expenses thence they are do by as stop consonant toll quite a that Product Cost. This pillowcase of be is misrelated to manu positionuring command knock and comprise of goods change. Manufacturing command processing bangManufacturing overhead admits all follows of manufacturing such as in straight off corporeal, indirect aim, property taxes, victuals and repairs, insurance etc. It excludes the direct substantive and direct labor.The change and administrative expenses go forth not be account in the manufacturing overhead since they are not incurred for the turnout of the goods. Cost of Goods Sold Cost of goods change is a constitute incurred to obtain the earthy visible for the proceedsion andfor producing the products that are sold to the consumers. Cost of goods sold (Beginning merchandise pedigree + document purchases balanceing inventory. ) Since the selling and administrative expenses are not incurred for obtaining the raw material as well as manufacturing the product they will not be reported in the cost of goods sold.Selling and Administrative Expenses The selling and administrative expenses are incurred for delivering the goods to the consumers, and also for the announce of the products. The following are examples management expenses, bargainsman salaries, clerical expenses and advertisement expenses. 1. channelize the companys predetermined overhead application rate. Budgeted smasher 5,460,000 Budgeted Direct Labor 4,200,000 Predetermined smash Rate 130% 2. Calculate the additions to the work-in-process inventory account for the direct material use, direct labor and manufacturing overhead. Direct Material used 5 ,600,000 Direct Labor 4,350,000 Manufacturing overhead 5,655,000 kernel Addition 15,605,000 . Calculate the finished-goods inventory for the 12/31/01 balance sheet. Direct material cost 156,000 Direct labor 85,000 Manufacturing overhead 110,500 Finished goods inventory 351,500 All amounts in the work at-in-Process must be transferred to Finished-Goods-Inventory due to the fact that there is no Work-in-Process at course end. Therefore Dr. Cr. Finished goods inventory 5,811,800 Work in process Inventory 5,811,800 4. Calculate the over- utilise/under-applied overhead at year end Applied overhead 5,655,000. 00 Actual overhead 5,554,000. 00 Over-a pplied overhead 101,000. 00 Calculation of Actual command processing overhead time Indirect materials used 65,000. 00 Indirect labor 2,860,000. 00 manufacturing plant depreciation 1,740,000. 0 Factory insurance 59,000. 00 Factory utilities 830,000. 00 Total 5,554,000. 00 Dr. Cr. Manufacturing Overhead $5,554,000 Cost of Goods Sold $5,554,000 5.Explain if it is appropriate to include selling and administrative expenses in the cost of goods sold category. Companys cost of goods sold totals $15,309,300 Finished-goods inventory, Jan 1 0. 00 Add Cost of goods manufactured 15,761,800. 00 Cost of goods available for sale $15,761,800. 00 L ess Finished-goods inventory, Dec. 1 351,500. 00 Unadjusted cost of goods sold 15,410,300. 00 Less Over applied overhead 101,000. 00 Cost of goods sold $15,309,300. 00 The firms selling and administrative expenses are operating expenses therefore they are treated as Period Cost rather that Product Cost. This type of cost is unrelated to manufacturing overhead and cost of goods sold.

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