Question

Answer all questions:

1) Purchases = $92,000

Materials Inventory, Beginning = $6000

Materials Inventory, Ending = $8000

Direct Labor = $25,000

Factory Overhead = $37,000

Work In Process, Beginning = $22,000

Work in Process, Ending = $18,500

Finished Goods Inventory, Beginning = $21,000

Finished Goods Inventory, Ending = $25,000

Sales = $257,000

Selling and Administrative Expenses = 479,000

Required: Which of the above accounts would appear on an Income Statement ?

2) Refer to #1. Which of the above accounts would appear on a Statement of Cost of Goods Manufactured ?

3) Refer to #1. Compute total manufacturing costs

4) Refer to #1. Compute prime costs at end of period

5) Refer to #1. Compute conversion costs

Answer 1

Answer: (1)

Statement of Cost of Goods Manufactured
Direct Material
Material inventory - Beginning	6,000
Add : Purchases	92,000
Sub- Total	98,000
Less : Material Inventory -Ending	(8,000)
Direct Material used		90,000
Direct Labor		25,000
Factory Overhead		37,000
Total Manufacturing Cost		152,000
Add : WIP - Beginning		22,000
Less : WIP -Ending		(18,500)
Cost of Goods Manufactured		155,500

Statement of Cost of Goods Sold
Beginning Finished Goods Inventory	21,000
Add :Cost of Goods Manufactured	155,500
Sub - Total	176,500
Less: Ending Finished Goods Inventory	(25,000)
Cost of Goods sold	151,500

Income Statement
Sales	257,000
Less : Cost of Goods Sold	(151,500)
Gross Profit	105,500
Less:Selling $ Admn. Exp	(479,000)
Net Operating Income (Loss)	(373,500)

Prime Cost
Direct Material Used	90,000
Direct Labor	25,000
Total Prime Cost	115,000

Conversion Cost
Direct Labor	25,000
Factory Overhead	37,000
Total Conversion Cost	62,000