Flow of Costs with Proration and 100% COGS Adjustments James Michael schedules autograph signings for football fans
Question:
Flow of Costs with Proration and 100% COGS Adjustments
James Michael schedules autograph signings for football fans and creates posters to sell at each
signing. James uses a normal-costing system with two direct cost pools, labor and materials, and
one indirect cost pool, general overhead. General overhead is allocated to each signing based on
70% of labor cost. Actual overhead equaled allocated overhead in April 2023. Actual overhead in
May was $1,000. All costs incurred during the planning stage for a signing and during the
signing are gathered in a balance sheet account called “Signings in Progress (SIP.)” When a
signing is completed, the costs are transferred to an income statement account called, “Cost of
Completed Signing (CCS).” Following is cost information for May, 2023:
From Beginning SIP | Incurred in May | ||||||
Athlete | Materials | Labor | Overhead | Materials | Labor | Overhead | |
Benji Binkleman | $500 | $800 | ? | $300 | $200 | ? | |
Ravi Patel | $300 | $1,000 | ? | $700 | $200 | ? | |
Rebecca Rampton | $600 | $500 | ? | $500 | $900 | ? |
The signings for Benji Binkleman and Ravi Patel were completed in May.
a.Calculate the SIP at the end of May.
b. Calculate the CCS for May.
c. Calculate the under/overallocated overhead at the end of May.
d.Calculate the ending balances in SIP and CCS if the under/overallocated overhead
amount is as follows:
i. Written off to CCS
ii. Prorated based on the ending balances (before proration) in SIP
and CCS.
Cost Accounting A Managerial Emphasis
ISBN: 978-0132109178
14th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav