AGENDA
Tonight:
Chapter 5 Cases
Chapter 9
Next Week:
Chapter 9
Chapter 9 Case
1
Chapter 5
BSMM 8110 F2021
Schedule of COGM and COGS
Primare Corporation has provided the following data
concerning last month’s manufacturing operations:
Description Amount
Purchase of Raw Material $30,000
Indirect Materials included in MFG. O/H $5,000
Direct Labour $58,000
Manufacturing overhead applied to work in $87,000
process
Underapplied overhead $4,000
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Schedule of COGM and COGS
Inventories Beginning Ending
Raw Materials $12,000 $18,000
Work in process $56,000 $65,000
Finished Goods $35,000 $42,000
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Schedule of COGM and COGS
Required:
1. Prepare a schedule of cost of goods manufactured for the
month.
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Schedule of COGM and COGS Beginning Mat. Inv. $12,000
Ending Mat. Inv. $18,000
1. Schedule of Cost of Goods Manufactured: Purchases $30,000
Indirect Materials $5,000
Direct materials: Direct Labour $58,000
Beginning raw materials inventory ................ Mfg. O/H $87,000
Add: Purchases of raw materials................... WIP beginning $56,000
Total raw materials available ........................ WIP ending $65,000
Deduct: Ending raw materials inventory ........
Raw materials used in production .................
Less indirect materials included in
manufacturing overhead ............................
Direct labour....................................................
Manufacturing overhead applied to work in
process .........................................................
Total manufacturing costs ................................
Add: Beginning work in process inventory .........
Deduct: Ending work in process inventory .........
Cost of goods manufactured .............................
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Schedule of COGM and COGS
1. Schedule of Cost of Goods Manufactured:
Direct materials:
Beginning raw materials inventory ................ $12,000
Add: Purchases of raw materials................... 30,000
Total raw materials available ........................ 42,000
Deduct: Ending raw materials inventory ........ 18,000
Raw materials used in production ................. 24,000
Less indirect materials included in
manufacturing overhead ............................ 5,000 $ 19,000
Direct labour.................................................... 58,000
Manufacturing overhead applied to work in
process ......................................................... 87,000
Total manufacturing costs ................................ 164,000
Add: Beginning work in process inventory ......... 56,000
220,000
Deduct: Ending work in process inventory ......... 65,000
Cost of goods manufactured ............................. $155,000
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Schedule of COGM and COGS
Required:
2. Prepare a schedule of cost of goods sold for the month.
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Schedule of COGM and COGS Beginning FG Inv. $ 35,000
Ending FG Inv. $42,000
Underapplied Inv. $4,000
2. Schedule of Cost of Goods Sold:
Beginning finished goods inventory ...................
Add: Cost of goods manufactured .....................
Cost of goods available for sale.........................
Deduct: Ending finished goods inventory ...........
Unadjusted cost of goods sold ..........................
Add: Underapplied overhead.............................
Adjusted cost of goods sold ..............................
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Schedule of COGM and COGS
2. Schedule of Cost of Goods Sold:
Beginning finished goods inventory ................... $ 35,000
Add: Cost of goods manufactured ..................... 155,000
Cost of goods available for sale......................... 190,000
Deduct: Ending finished goods inventory ........... 42,000
Unadjusted cost of goods sold .......................... 148,000
Add: Underapplied overhead............................. 4,000
Adjusted cost of goods sold .............................. $152,000
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Plantwide and Departmental O/H Rates
Wilmington Company has two manufacturing departments:
Assembly and Fabrication. It considers all of its manufacturing
overhead costs to be fixed costs. The first set of data that is
shown below is based on estimates from the beginning of the
year. The second set of data relates to one particular job
during the year: Job Bravo.
Assembly Fabrication Total
Manufacturing Overhead costs $600,000 $800,000 $1,400,000
Direct Labour Hours 50,000 30,000 80,000
Machine Hours 20,000 100,000 120,000
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Plantwide and Departmental O/H Rates
The second set of data relates to one particular job during the
year: Job Bravo.
Assembly Fabrication
Direct Labour Hours 11 3
Machine Hours 3 6
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Plantwide and Departmental O/H Rates
Required:
1. If Wilmington used a plantwide overhead rate based on
direct labour hours, how much manufacturing overhead
would be applied to Job Bravo?
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Plantwide and Departmental O/H Rates
1. The predetermined plantwide overhead rate is calculated
as follows:
Estimated manufacturing
overhead (a)
Estimated total direct labour-
hours (b)
Predetermined overhead rate
(a) ÷ (b)
Mfg. OH $1,400,000
DL 80,000 hours
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Plantwide and Departmental O/H Rates
1. The predetermined plantwide overhead rate is computed as follows:
Estimated manufacturing overhead (a) ....... $1,400,000
Estimated total direct labour-hours (b) ....... 80,000 DLHs
Predetermined overhead rate (a) ÷ (b) ....... $17.50 per DLH
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Plantwide and Departmental O/H Rates
1. The overhead applied to Job Bravo is calculated as follows:
Direct labour hours worked
on Bravo (a)
Predetermined overhead rate
(b)
Overhead applied to Bravo
(a) x (b)
DL 14 hours
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Plantwide and Departmental O/H Rates
The overhead applied to J ob Bravo is computed as follows:
Direct labour-hours worked on Bravo (a) .... 14
Predetermined overhead rate (b) ............... $17.50 per DLH
Overhead applied to Bravo (a) × (b)........... $245
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Plantwide and Departmental O/H Rates
Required:
2. If Wilmington uses a departmental predetermined
overhead rates with direct labour as the allocation base in
Assembly and machine hours as the allocation base in
Fabrication how much manufacturing overhead would be
applied to Job Bravo?
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Plantwide and Departmental O/H Rates
2. The predetermined overhead rate in Assembly is calculated
as follows: Mfg. O/H $600,000
DL 50,000
Estimated manufacturing
overhead (a)
Estimated total direct
labour-hours (b)
Predetermined overhead
rate (a) ÷ (b)
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Plantwide and Departmental O/H Rates
2. The predetermined overhead rate in Assembly
is computed as follows:
Estimated manufacturing overhead (a) ....... $600,000
Estimated total direct labour-hours (b) ....... 50,000 DLHs
Predetermined overhead rate (a) ÷ (b) ....... $12.00 per DLH
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Plantwide and Departmental O/H Rates
2. Fabrication:
Estimated manufacturing
overhead (a)
Estimated total direct
labour-hours (b)
Predetermined overhead
rate (a) ÷ (b)
Mfg. O/H $800,000
DL 100,000
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Plantwide and Departmental O/H Rates
2. The predetermined overhead rate in Fabrication
is computed as follows:
Estimated manufacturing overhead (a) ....... $800,000
Estimated total machine-hours (b).............. 100,000 MHs
Predetermined overhead rate (a) ÷ (b) ....... $8.00 per MH
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Plantwide and Departmental O/H Rates
2. The overhead applied to Job Bravo is calculated as follows
Quantity of allocation
base used (a)
Predetermined overhead
rate (b)
Overhead applied to Bravo
(a) x (b)
Fabrication 11
Assembly 6
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Plantwide and Departmental O/H Rates
2. The overhead applied to Job Bravo is calculated as follows
Assembly Fabrication Total
Quantity of allocation base used (a) 11 6
Predetermined overhead rate (b)..... $12.00 $8.00
Overhead applied to Bravo (a) × (b) $132 $48 $180
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