Question

Auto Parts Company produces 12 parts for car bodies and sells them to four automobile assembly companies in Canada. The company implemented lean operating and costing procedures three years ago. Overhead is applied at a rate of $26 per work cell hour used. All direct materials and purchased parts are used as they are received.
One of the company’s work cells produces automotive fenders that are completely detailed and ready to install when received by the customer. The cell is operated by four employees and involves a flexible manufacturing system with 14 workstations. Operating details for February for this cell follow.
Beginning work in process inventory ............. —
Beginning finished goods inventory .............. $ 420
Cost of direct materials purchased on account and used ...... $213,400
Cost of parts purchased on account and used .......... $111,250
Direct labor costs incurred ................. $ 26,450
Overhead costs assigned ................... ?
Work cell hours used ................... 8,260
Costs of goods completed during February ........... $564,650
Ending work in process inventory .............. $ 1,210
Ending finished goods inventory .............. $ 670

Required
1. Using T accounts, show the cost flows through a backflush costing system.
2. Using T accounts, show the cost flows through a traditional costing system.
3. What is the total cost of goods sold for the month?



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  • CreatedMarch 26, 2014
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