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Mulligan Manufacturing Company uses a job order cost system with overhead applied to products at a rate of 150 percent of direct labor cost

Accounting Jan 24, 2021

Mulligan Manufacturing Company uses a job order cost system with overhead applied to products at a rate of 150 percent of direct labor cost. Required: Treating each case independently, selected from the manufacturing data given below, find the missing amounts. You should do them in the order listed. (Hint: For the manufacturing costs in Case 3, first solve for conversion costs and then determine how much of that is direct labor and how much is manufacturing overhead.) (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Enter all amounts as positive values.) Case 1 Case 2 Case 3 Direct material used 12,900 15,000 12,000 12,000 25,000 31,200 8,300 8,500 Direct labor Manufacturing overhead applied Total current manufacturing costs Beginning work in process inventory Ending work in process inventory Cost of goods manufactured Beginning finished goods inventory Ending finished goods inventory Cost of goods sold 5,900 9,400 4,001 47,000 10,100 5,000 8,500 5,100 36,000 41,000

Expert Solution

  Case 1 Case 2 Case 3  
Direct material used (A) $      15,000 $        5,000 $      12,900  
Direct Labor (B) $      12,000 $        8,000 $        7,320 (Working note: 2)
Manufacturing overhead applied ( C ) $      18,000 $      12,000 $      10,980  
Total Manufacturing costs(A+B+C) $      45,000 $      25,000 $      31,200  
Add: Beginning WIP Inventory $         8,500 $      31,400 $         8,300  
Deduct: Ending WIP Inventory $         5,900 $         9,400 $      35,499  
Cost of Goods Manufactured $      47,600 $      47,000 $         4,001  
Add: Beginning Finished Goods Inventory $         5,000 $      10,100 $      42,099  
Deduct: Ending Fimished Goods Inventory $         8,500 $      21,100 $         5,100  
Cost of Goods Sold $      44,100 $      36,000 $      41,000  

Working note 1:

  Case 1 Case 2 Case 3
Direct material used (A) $      15,000 25000-12000-8000 $      12,900
Direct Labor (B) $      12,000 12000*100/150 $        7,320
Manufacturing overhead applied ( C ) 12000*150% $      12,000 7320*150%
Total Manufacturing costs(A+B+C) 15000+12000+18000 $      25,000 $      31,200
Add: Beginning WIP Inventory $         8,500 47000+9400-25000 $         8,300
Deduct: Ending WIP Inventory $         5,900 $         9,400 31200+8300-4001
Cost of Goods Manufactured 45000+8500-5900 $      47,000 $         4,001
Add: Beginning Finished Goods Inventory $         5,000 $      10,100 41000+5100-4001
Deduct: Ending Fimished Goods Inventory $         8,500 47000+10100-36000 $         5,100
Cost of Goods Sold 47600+5000-8500 $      36,000 $      41,000

Working note 2:

Case 3:

Assume, Direct Labor =  x

Then, $ 12,900+ x + (x* 150%) = $ 31,200

25x/10 = $ 18,300

Therefore x = $ 7,320

Hence, Direct labor = $ 7,320

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