Purchase Solution

Flow of Costs through Manufacturing Accounts

Not what you're looking for?

Ask Custom Question

Please see the attached file.
Stone Tools, Inc., had the following account balances as of January 1:

Direct Materials Inventory $8,700.00
Work in Process Inventory $76,500.00
Finished Goods Inventory $53,000.00
Manufacturing Overhead $-

During the month of January, all of the following occurred:
1. Direct labor costs were $42,000 for 1,800 hours worked.
2. Direct materials costing $25,750 and indirect materials costing $3,500 were purchased.
3. Sales commissions of $16,500 were earned by the sales force.
4. $26,000 worth of direct materials were used in production.
5. Advertising costs of $6,300 were incurred.
6. Factory supervisors earned salaries of $12,000.
7. Indirect labor costs for the month were $3,000.
8. Monthly depreciation on factory equipment was $4,500.
9. Utilities expense of $7,800 was incurred in the factory.
10. Tools with manufacturing costs of $69,000 were transferred to finished goods.
11. Monthly insurance costs for the factory were $4,200.
12. $3,000 in property taxes on the factory were incurred and paid.
13. Tools with manufacturing costs of $89,000 were sold for $165,000.

Instructions
a. If Stone assigns manufacturing overhead of $32,400, what will be the balances in the Direct
Materials, Work in Process, and Finished Goods Inventory accounts at the end of January?
b. As of January 31, what will be the balance in the manufacturing Overhead account?
c. What was Stone's operating income for January?

Attachments
Purchase this Solution
Solution Summary

The solution explains how to calculate the ending balances in the manufacturing accounts and then how to prepare the income statement

Solution Preview

Please see the attached file.

Stone Tools, Inc., had the following account balances as of January 1:

Direct Materials Inventory $8,700.00
Work in Process Inventory $76,500.00
Finished Goods Inventory $53,000.00
Manufacturing Overhead $-

During the month of January, all of the following occurred:
1. Direct labor costs were $42,000 for 1,800 hours worked.
2. Direct materials costing $25,750 and indirect materials costing $3,500 were purchased.
3. Sales commissions of $16,500 were earned by the sales force.
4. $26,000 worth of direct materials were used in production.
5. Advertising costs of $6,300 were incurred.
6. Factory supervisors earned salaries of $12,000.
7. Indirect labor costs for the month were $3,000.
8. ...

Purchase this Solution
Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Introduction to Finance

This quiz test introductory finance topics.

View More Free Quizzes
Related BrainMass Solutions

  • Doc Gibbs has prepared the following list of statements about process cost accounting.

    Both job order costing and process costing account for direct materials, direct labor, and manufacturing overhead. 7. Costs flow through the accounts in the same basic way for both job order costing and process costing. 8.

  • Computing Inventory and Overhead Balances and Operating Income

    627287 Computing Inventory and Overhead Balances and Operating Income EXERCISE 16.6 The Ryde and Rowe Inc. had the following account balances as of January 1: Flow of Costs through Manufacturing Accounts Direct Materials Inventory . . . . . . . .

  • Job order cost and process cost systems

    The flow of costs through the manufacturing accounts is basically the same in both systems Differences between Job-Order and Process Costing  Process costing is used when a single product is produced on a continuing basis or for a long period

  • Similarities & Dissimilarities of Job and Process Costing

    The flow of costs through the manufacturing accounts is basically the same in job costing and process costing.

  • Process Cost Accounting for Doc Gibbs: Identify each stateme

    Both job order costing and process costing account for direct materials, direct labor, and manufacturing overhead. 7. Costs flow through the accounts in the same basic way for both job order costing and process costing. 8.

  • Cost Accounting - Pawnee Workshop,Queen corps, Julius Berger

    Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold. 2)Queen corps estimates its manufacturing overhead to be $90,000 and its direct labor costs to be $200,000 for year 1.The actual

  • Activity based costing, labour variances

    of the flow of physical units, Calculation of equivalent units, Cost reconciliations the pro-forma income statement, Computation of unit cost, Valuation of inventories (goods transferred out and ending work in process) c) Analysis of the flow of physical

  • Cash budget

    3) Cash flow on Manufacturing Costs August September October Manufacturing cost 300,000 340,000 390,000 out of which depreciation, insurance, property tax which do not flow

  • Baxter Company: Work in process: solve for missing amounts

    My comments and cost flow chart is attached. Thank you for asking Brainmass! Added comment: When you have DM and OH but not DL, you appear to be stuck. But you have one additional fact that helps you: Total manufacturing costs!

View More Related Solutions