Newcastle Company's Beginning and Ending Inventories for the Month of January

question 36

Multiple Choice

Newcastle Company's beginning and ending inventories for the month of January were as follows: $\begin{array}{lrr}&\text { January } 1&\text { January } 31\\ \text {Direct Materials } &£ 80,000 & £ 78,000\\ \text { Work in Process } &£ 155,000 &£ 166,000\\ \text { Finished Goods} &£ 90,000& £ 88,000\\\end{array}$

Production data for month follow: $\begin{array}{lrr} \text { Direct labour cost incurred.} &£ 215,000\\ \text { Actual manufacturing overhead cost incurred } &£ 145,000\\ \text {Direct materials purchases} &£ 160,000\end{array}$

Newcastle applies manufacturing overhead cost to jobs at the rate of 75% of direct labour cost incurred. This rate has been used for many years. The company does not close under- or overapplied manufacturing overhead to Cost of Goods Sold until the end of the year.
-The management accountant wants to apply manufacturing overhead at a rate of 75% of direct labour. The managing director wants to know how this change will affect reported profit. (Assuming Newcastle applies manufacturing overhead cost to jobs at the rate of 75% of direct labour cost incurred) . Newcastle Company's total manufacturing cost for January was:

• A)£522,250.
• B)£538,250.
• C)£463,000.
• D)£465,250.

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Definitions:

Left Atria

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Progesterone

A hormone produced in the ovaries, placenta, and adrenal glands that plays a key role in the menstrual cycle, pregnancy, and embryogenesis.

Oral Contraceptives

Medications taken by mouth to prevent pregnancy, commonly known as birth control pills.

Estrogen

A group of steroid hormones that play a crucial role in the development and maintenance of female characteristics and reproductive functions.