Question

Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory was 90 percent of March 1 work-in-process inventory. Manufacturing overhead applied was 50 percent of direct-labor cost. Other information pertaining to the company’s inventories and production for the month of March is as follows:

Beginning inventories, March 1:
Raw material	$	18,000
Work in process		40,000
Finished goods		102,000
Purchases of raw material during March		112,000
Ending inventories, March 31:
Raw material		26,000
Work in process		?
Finished goods		105,000
Required: 1. Prepare a schedule of cost of goods manufactured for the month of March

2. Prepare a schedule to compute the prime costs (direct material and direct labor) incurred during March.

3. Prepare a schedule to compute the conversion costs (direct labor and manufacturing overhead) charged to work in process during March.

Answer 1

working:                             

1) Cost of goods sold ($345,000) = Cost of goods manufactured + beginning finished goods inventory($102,000) - ending finished goods inventory($105,000)                        

Cost of goods manufactured = $348,000                               

2) total manufacturing cost for March ($344,000) - raw materials used ($104,000) = direct labor and manufacturing overhead ($240,000)                          

Let x = direct labor                          

1.5x = $240,000                

x = $160,000 i.e. direct labor                       

0.5x = $80,000 i.e. factory overhead