Managerial Accounting: Cost Analysis, Inventory, and Overhead

This assignment solution addresses a managerial accounting problem from King Abdulaziz University, focusing on cost analysis, overhead application, and inventory valuation. The solution begins by analyzing the overapplied or underapplied overhead for the year, based on the provided data and the 150% direct labor overhead application rate. It then calculates the cost of finished goods inventory using the information on direct materials, direct labor, and overhead costs (including indirect materials, indirect labor, and other overhead costs). The solution provides a detailed breakdown of cost components, leading to the calculation of total manufacturing costs, cost of goods sold, cost of incomplete goods, and finally, the cost of finished goods inventory. The solution also includes a reference to a journal article that may be relevant to the problem.

Running head: MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
Name of the Student
Name of the University
Author Note:

1
MANAGERIAL ACCOPUNTING
Table of Contents
Overapplied or Underapplied overhead for the year..................................................................2
Calculation showing cost for finished ending inventory............................................................2
Reference....................................................................................................................................3

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MANAGERIAL ACCOPUNTING
Overapplied or Underapplied overhead for the year.
The over applied or under applied overhead for the year is calculated using the budget
prepared in comparison with the actual cost incurred (Farkas, Kersting and Stephens 2016).
In the given case, no information is provided related to the budget so it is not possible to
analysis which overhead is overapplied or underapplied during the year. However,
considering the information provided, the manufacturing overhead seems to be overapplied as
the manufacturing overhead for the year is 150% of direct labour.
Calculation showing cost for finished ending inventory.
Direct Cost
Amount
($)
Direct Material Issued to Job 24000
Direct labour 84000
Prime Cost 108000
Overhead
Indirect Material 6000
Indirect Labour 16000
Manufacturing Overhead 126000
Other Overhead 112000
Total manufacturing cost of goods 368000
Less: Cost of goods sold 100000
Less: Cost of goods remaining incomplete 115000
Cost of finished goods lying in inventory 153000

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MANAGERIAL ACCOPUNTING
Reference
Farkas, M., Kersting, L. and Stephens, W., 2016. Modern Watch Company: An instructional
resource for presenting and learning actual, normal, and standard costing systems, and
variable and fixed overhead variance analysis. Journal of Accounting Education, 35, pp.56-
68.