Reid’s Dairy, a small town ice cream manufacturer, is trying to calculate their production costs for the year 2012 and would like your help. The company would like you to use the t-table below to show your work. They have provided you with the following information:
Raw Materials were purchased for $1,250,000
Machine hours totaled 60,000
The company began work 35,000 tubs of ice cream in 2012:
• Each unit absorbed $25 of direct materials
• Each unit required 4 hours of direct labour, at a rate of $12/hour
Indirect materials used, such as napkins and plastic spoons, totalled $300,000
Indirect labour, such as janitors and factory administrators, totalled 80,000 hours at the same rate as direct labour.
The cost of running and maintaining the ice cream machines totalled $100,000
Overhead is applied traditionally at a rate of $25/machine hour.
Beginning Work in Process inventory for the year 2012 totalled $425,000. The ending
balance was $25,000.
Finished Goods Inventory had a balance of $0 in January, and $80,000 in December.
a. What is the remainder in Raw Materials Inventory at year end if the beginning balance was $0?
b. What is the total amount paid for labour in 2012?
c. What was the value difference between the applied and actual overhead? Is this amount over or under applied?
d. What amount of good were completed in 2012 (dollar value)?
e. What is the Cost of Goods Sold?