Preparing and Packaging

Question 1

Josh Donaldson is employed by Bringer of Rain Inc. and is directly involved in preparing and packaging the MLB official baseballs. The basic wage rate is $15 per hour and he is paid time-and-a-half for any work in excess of 40 hours per week. Additionally, Bringer of Rain Inc. provides a fringe benefit package that costs the company $5 for each hour of employee time (regular or overtime). During a recent week, Donaldson worked 49 hours but was idle for 3 hours due to a materials shortage.

Assume that Bringer of Rain Inc. treats all fringe benefits as part of manufacturing overhead. Compute Donaldson’s total wages and fringe benefits for the week and indicate how much of his wages and fringe benefits for the week would be allocated to direct labour and how much would be allocated to manufacturing overhead.

Question 2

Prepare a schedule of cost of goods manufactured in good form.

The following costs relate to one month’s activity in Nutcracker Company:

Indirect materials

$300

Rent on factory building

500

Maintenance of equipment

50

Direct material used

1,200

Utilities on factory

250

Direct labour

1,500

Selling expense

500

Administrative expense

300

Work-in-process inventory, beginning

600

Work-in-process inventory, ending

800

Finished goods inventory, beginning

500

Finished goods inventory, ending

250