Reference no: EM132846450

Problem - Jerry's Company had the following cost records for the past year:

Direct materials used in production: $2,250,000.

Direct labour cost: $2,345,000.

Manufacturing overhead applied: $3, 700,000.

Selling and administrative expenses: $2,000,000.

The beginning inventory balances of the year and ending inventory balances at the end of the year were as follows:

Beginning Balance Ending Balance

Direct materials Inventory $50,000 $20,000

Work in process Inventory $150,000 $100,000

Finished goods Inventory $10,000 $5,000

Required -

1. What was the cost of direct materials purchased for the past year?

2. What was the cost of goods manufactured for the past year?

3. What was the cost of goods sold for the past year?

4. If the sales revenue for the past year was $25,000,000 what was Jerry Company's net profit for the past year? Prepare an income statement to show your calculations.

5. The accountant of Jerry Company has become aware that the actual manufacturing overhead for the past year was $3,750,000. What was Jerry Company's actual cost of goods sold for the past year?

6. What impact does the closing of the under- or over-applied overhead have on the cost of goods sold and profit of Jerry Company? Show all calculations.