Boston Bean Counter Corporation produces advanced, highly accurate, laser-enabled,digital bean counters for the food industry. For years, they have been plagued by cost overruns and excessive inventory levels. Management is determined to remedy these issues by using Cost Accounting techniques for improved management decision making.
Below are selected inventory balances for the year 2024:
Below are selected journal entries for activities occurring during the year 2025:
Additional information:
No indirect materials used during 2025.
Boston consistently maintains a 40% gross margin percentage.
Required:
a. Determine ending inventory amounts in Raw Materials, Work-In-Process and Finished Goods Inventories.
b. Based upon the provided information, was Boston successful in lowering inventory levels in 2025? Explain.
c. What was Boston's Cost of Goods Sold for 2025?
d. Does Boston use Actual Costing or Normal Costing? Explain.
e. Recently, during a routine audit, Boston Bean Counter's auditor expressed a concern that in the past, Boston's amount of overapplied or underapplied MOH was significant and recommended that if this situation continues, Boston should not eliminate this differential by closing the entire amount out to the Cost of Goods Sold account. If Boston is not able to significantly reduce the difference between applied MOH relative to actual MOH, what other method should Boston use to eliminate overapplied or underapplied MOH? Explain.

Question

Boston Bean Counter Corporation produces advanced, highly accurate, laser-enabled,digital bean counters for the food industry. For years, they have been plagued by cost overruns and excessive inventory levels. Management is determined to remedy these issues by using Cost Accounting techniques for improved management decision making.
Below are selected inventory balances for the year 2024:
  Below are selected journal entries for activities occurring during the year 2025:
  Additional information:
No indirect materials used during 2025.
Boston consistently maintains a 40% gross margin percentage.
Required:
a. Determine ending inventory amounts in Raw Materials, Work-In-Process and Finished Goods Inventories.
b. Based upon the provided information, was Boston successful in lowering inventory levels in 2025? Explain.
c. What was Boston's Cost of Goods Sold for 2025?
d. Does Boston use Actual Costing or Normal Costing? Explain.
e. Recently, during a routine audit, Boston Bean Counter's auditor expressed a concern that in the past, Boston's amount of overapplied or underapplied MOH was significant and recommended that if this situation continues, Boston should not eliminate this differential by closing the entire amount out to the Cost of Goods Sold account. If Boston is not able to significantly reduce the difference between applied MOH relative to actual MOH, what other method should Boston use to eliminate overapplied or underapplied MOH? Explain.

Quizplus · Accepted Answer

The Answer of Boston Bean Counter Corporation produces advanced, highly accurate, laser-enabled,digital bean counters for the food industry. For years, they have been plagued by cost overruns and excessive inventory levels. Management is determined to remedy these issues by using Cost Accounting techniques for improved management decision making.
Below are selected inventory balances for the year 2024:
  Below are selected journal entries for activities occurring during the year 2025:
  Additional information:
No indirect materials used during 2025.
Boston consistently maintains a 40% gross margin percentage.
Required:
a. Determine ending inventory amounts in Raw Materials, Work-In-Process and Finished Goods Inventories.
b. Based upon the provided information, was Boston successful in lowering inventory levels in 2025? Explain.
c. What was Boston's Cost of Goods Sold for 2025?
d. Does Boston use Actual Costing or Normal Costing? Explain.
e. Recently, during a routine audit, Boston Bean Counter's auditor expressed a concern that in the past, Boston's amount of overapplied or underapplied MOH was significant and recommended that if this situation continues, Boston should not eliminate this differential by closing the entire amount out to the Cost of Goods Sold account. If Boston is not able to significantly reduce the difference between applied MOH relative to actual MOH, what other method should Boston use to eliminate overapplied or underapplied MOH? Explain.

Boston Bean Counter Corporation Produces Advanced, Highly Accurate, Laser-Enabled,digital Bean