Flint, a coffee-mug producer, generally conducts over half of its business in the last month of...
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Flint, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By the end of December, its fiscal year-end, Flint had accumulated Cost of Goods Sold in the amount of $249,000. Flint's business model is to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $14,000 and $19,000, respectively. on December 31. Flint does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all direct materials) is $84,000. Flint utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH rate is $2.25/direct labor hour. Budgeted MOH at the beginning of the year was $154,000; actual MOH costs incurred by the end of the year were $152,000. Actual direct labor hours used were 65,000. (a) Was Flint's MOH cost for the year under- or overapplied? By how much? Flint, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By the end of December, its fiscal year-end, Flint had accumulated Cost of Goods Sold in the amount of $249,000. Flint's business model is to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $14,000 and $19,000, respectively. on December 31. Flint does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all direct materials) is $84,000. Flint utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH rate is $2.25/direct labor hour. Budgeted MOH at the beginning of the year was $154,000; actual MOH costs incurred by the end of the year were $152,000. Actual direct labor hours used were 65,000. (a) Was Flint's MOH cost for the year under- or overapplied? By how much?
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Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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