The Following Inventory Information Is Available for Ricci Manufacturing Corporation

question 74

Essay

The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2017:
In addition, the following transactions occurred in 2017:
1. Raw materials purchased on account, $75,000.
2. Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable).
3. Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $9,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation).
4. Assigned $80,000 of factory labor to jobs.
5. Applied $36,000 of overhead to jobs.
Instructions
(a) Journalize the above transactions.
(b) Reproduce the manufacturing cost and inventory accounts. Use T-accounts.
(c) From an analysis of the accounts, compute the following:
1. Raw materials used.
2. Completed jobs transferred to finished goods.
3. Cost of goods sold.
4. Under- or overapplied overhead.

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Definitions:

Labor Hours

The total number of hours worked by all employees or workers in a specific period, often used to measure productivity or output.

Producing

The process of creating goods or services to be offered for sale, involving the combination of various resources.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits missed out on.

Tacos

A traditional Mexican dish consisting of a corn or wheat tortilla folded or rolled around a filling, such as beef, pork, chicken, or beans.