In April 2013, NoCal Trailers Co. had the following cost data: COST DATA a. Raw
ID: 2468583 • Letter: I
Question
In April 2013, NoCal Trailers Co. had the following cost data: COST DATA a. Raw materials costing $82,000 were purchased. b. Raw materials costing $80,000 were used: direct materials, $75,000; indirect materials $5,000. c. Factory wages of $52,000 were incurred: direct labor $50,000; indirect labor $2,000. Social security tax deductions were $3,224, Medicare tax deductions were $754, federal income tax deductions were $7,800. d. Other overhead costs of $28,000 were incurred. (Credit Accounts Payable.) e. Estimated manufacturing overhead costs were applied to jobs in production at the rate of 80 percent of direct labor costs. f. Finished goods costing $150,000 were transferred from production to the warehouse. g. The cost of goods sold was $120,000. h. Sales on account for the month were $250,000
a. Compute the amount of overapplied or underapplied overhead for the month.
b)Prepare a partial income statement for April. Adjust the Cost of Goods Sold for any overapplied or underapplied overhead.
c)Based on the partial income statement you have prepared, what portion of each sales dollar is realized as gross profit?
a. Compute the amount of overapplied or underapplied overhead for the month.
b)Prepare a partial income statement for April. Adjust the Cost of Goods Sold for any overapplied or underapplied overhead.
c)Based on the partial income statement you have prepared, what portion of each sales dollar is realized as gross profit?
Explanation / Answer
Compute the overhead overapplied Particulars Amount($) Amount($) Manufacturing Overhead Indirect Materials 5000 Indirect Labor 2000 Other overhead costs 28000 Total charged to manufacturing Overhead 35000 Manufacturing overhead applied 40000 Over applied overhead for the month 5000 Compute the partial income statement Particulars Amount($) Amount($) Sales 25000000 Cost of goods sold 12000000 Substract Overhead overapplied 500000 Cost of goods sold (Adjusted to actual) 11500000 Gross profit on sales 13500000 Analyze: Approximately $0.54 per sales dollar is realized as gross profit 13500000/25000000