The purpose of the comprehensive problems is to have students solve problems generally more detailed than the Connect homework and without a step-by-step template in which to input data. Thus, a clear and logical presentation of your solutions is part of the assignment – NO credit will be given for answers without supporting computations.

Additionally, while you are welcome to discuss strategies, ideas, etc. with others, each student is required to complete their own assignment. To facilitate this, everyone will use the LAST 5 digits of their student ID as the amount of Raw Materials used in production (see highlight below). NO credit will be given for a solution that does not correspond to your ID.

Problem Information:

Morrison Company began the year with the following balances in its inventory accounts:

• Raw Materials               $ 125,000
• Work-in-Process           $ 320,000
• Finished Goods             $ 400,000

Morrison applies overhead to production using direct labor cost. As of the beginning of the year, Morrison estimated total manufacturing overhead for the year to be $300,000 and total direct labor cost to be $600,000.

The following transactions occurred during the year:

1. Purchased $100,000 of raw materials on account.

2.  Used $9,292 raw materials In production (use the last 5 digits of your student ID number (which is 9,292) as the dollar value of raw materials used). Of the materials used, 80% were classified as direct and 20% as indirect.

3.  Incurred and paid wages and salaries of $600,000. The wages were classified as:

• Direct labor                                                            $525,000
• Indirect labor                                                          $ 75,000
• Selling and administration                                       $ 230,000

4. Incurred the following additional costs:

• Miscellaneous manufacturing overhead costs (this amount does not include costs of indirect materials, indirect labor and depreciation)              $ 85,000
• Selling and Administrative costs                               $230,000

5. Recorded total depreciation of $120,000, related to:

• Factory manufacturing equipment                                       $75,000
• Equipment used for selling and administrative purposes       $45,000

6. Work in process totaling $800,000 was transferred to Finished Goods during the year.

7. During the year, finished goods costing $1,000,000 were sold for $1,500,000.

REQUIRED (to receive credit, the answer must be supported by clearly presented, easy to understand, computations and must use the last 5 digits of your student ID which is 9,292 as the amount of materials used in production). Round all answers to the nearest dollar.

1. Compute the predetermined overhead rate Morrison will use to apply MOH to Work-in-Process.

2. Compute the amount of overhead applied to Work-in-Process during the year.

3.Compute the ending balances in Raw Materials, Work-in-Process, and Finished Goods accounts (hint: don’t forget to include beginning balances).

4. Compute the amount of over-or under-applied overhead for the year (be sure to label it as over or under applied).      

5. Assuming Morrison closes under or overapplied overhead to Cost of Goods Sold, compute adjusted COGS for the period.                                        

6. Prepare a traditional format income statement for the year (ignore income taxes).

7. Clarity of supporting computations.

Answer rating: 100% (QA)

1 Predetermined overhead rate for the year Estimated manufacturing overheads Direct labor cost 2 Amo... View the full answer