Baber, Inc., manufactures custom scaffolding used in construction projects. The following data pertain to its operations for
Question:
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.
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...
Step by Step Answer:
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin