Question: Southwick Company uses normal costing in its job costing system

Southwick Company uses normal costing in its job- costing system. Partially completed T- accounts and additional information for Southwick for 2012 are as follows:

Additional information follows:
a. Direct manufacturing labor wage rate was $ 12 per hour.
b. Manufacturing overhead was allocated at $ 16 per direct manufacturing labor- hour.
c. During the year, sales revenues were $ 1,050,000, and marketing and distribution costs were $ 125,000.
1. What was the amount of direct materials issued to production during 2012?
2. What was the amount of manufacturing overhead allocated to jobs during 2012?
3. What was the total cost of jobs completed during 2012?
4. What was the balance of work- in- process inventory on December 31, 2012?
5. What was the cost of goods sold before proration of under- or overallocated overhead?
6. What was the under-or overallocated manufacturing overhead in 2012?
7. Dispose of the under- or overallocated manufacturing overhead by writing off to Cost of Goods Sold.
8. Calculate Southwick’s operating income for 2012.
9. What alternative method could Southwick have used to dispose of the under- or overallocated manufacturing overhead? Without doing any further calculations, explain how this alternative method would have affected Southwick’s operating income. Which method would you recommend Southwick use? Explain your answerbriefly.

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  • CreatedJanuary 15, 2015
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