Problem 2-23 Question 1 Direct materials used in production last year Items Raw material purchases Add : Beginning

balance, raw materials Less : Ending balance, raw materials TOTAL $ 250,000 124,000 (102,000) 272,000

Question 2 Total prime cost (Direct materials + Direct Labor) Items Direct materials used Add : Direct labor TOTAL $ 272,000 140,000 412,000

Question 3 Total conversion cost (Direct labor + Manufacturing overhead) Items Direct labor Add : Depreciation on factory equipment Add : Depreciation on factory building Add : Factory insurance Add : Factory tax Add : Utilities for factory Add : Indirect labor salaries Total $ 140,000 45,000 30,000 15,000 20,000 34,000 156,000 440,000

Question 4 Cost of good manufactured statement for last year.

Brody Company Statement of Cost of Goods Manufactured For Last Year Items Materials used Add : Direct labor Add : Manufacturing factory overhead Depreciation on factory equipment Depreciation on factory building Factory insurance Factory tax Utilities for factory Indirect labor salaries Total manufacturing overhead Add : Beginning, work in process Less : Ending balance, work in process COST OF GOODS MANUFACTURED Product unit cost $ 272,000 140,000

45,000 30,000 15,000 20,000 34,000 156,000 300,000 124,000 (130,000) 706,000

= $ 7.06/unit

Question 5 Cost of goods sold statement for last year.

Brody Company Statement of Cost of Goods Sold For Last Year Items Cost of goods manufactured Add : Beginning balance, finished goods Less : Ending balance, finished goods COST OF GOODS SOLD $ 706,000 84,000 (82,000) 708,000

Question 6 Income statement for last year and include percentage of sales that each line item represents.

Brody Company Income Statement For Last Year

Items Sales revenue Less : Cost of goods sold Gross Margin Sales and administrative expenses Sales office salaries Sales commission HQ property taxes Utilities for sales office Depreciation of HQ building Administrative salaries Total sales and administrative expenses Operating income

$ 120,000 -708,000 492,000

% 100 59 41

90,000 60,000 18,000 1,800 50,000 150,000 369,800 122,200 30.8 10.18

Exercise 4-10 Question 1 What was the predetermined overhead rate? Plantwide rate = $476,000/17,000 = $28 per hour

Question 2 What was the applied overhead for last year? Applied overhead: $28 x 16,550 = $463,400 Question 3 Was overhead over- or underapplied, and by how much? When applied overhead < actual overhead, the overhead is underapplied. $463,400 < $475,000, Underapplied and the difference is $11,600.

Question 4 What was the total cost per unit produced? Unit Product cost = unit overhead cost + unit prime cost = $463,400 + $1,750,000 = $2,213,400 Total cost per unit produced: $2,213,400/250,000 = $8.8536