Baber, Inc., manufactures custom scaffolding used in construction projects. The following data pertain to its operations for

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Baber, Inc., manufactures custom scaffolding used in construction projects. The following data pertain to its operations for the most recent year:

Raw materials beginning inventory ... $23,000

Raw materials ending inventory .... $42,000

WIP beginning inventory ...... $98,500

WIP ending inventory ........ $76,400

Finished goods beginning inventory ... $124,350

Finished goods ending inventory ... $138,750

Raw materials purchased ....... $190,000

Labor cost ............ $145,000

Selling and administration expenses .... $87,600

Revenues .............. $694,740


You also know that Baber, Inc., uses two allocation bases to charge overhead to products.

It calculates a rate of 20% of materials cost for materials-related overhead. The rate for all other manufacturing overhead is 150% of labor cost.


Required:

a. Calculate the cost of raw materials issued to WIP during the year.

b. Calculate the cost of manufacturing overhead charged to production.

c. Calculate the cost of goods manufactured during the year.

d. Calculate the cost of goods sold during the year.

e. Prepare a GAAP income statement.

f. For a particular custom truss, Baber informs you that it incurred $7,800 toward materials and $12,300 toward labor costs. What is the inventoriable cost of this truss?

g. Comment on whether the value of the units as reported in the ending inventory account is a good estimate of the products’ costs for decisions such as setting pricing.


Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
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Related Book For  answer-question

Managerial accounting

ISBN: 978-0471467854

1st edition

Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin

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