Question

You have been given the following information for KLM Manufacturing:

Direct materials used                                           $53,000

Closing finished goods inventory                          34,000

Depreciation of factory equipment (a cost)          11,000

Factory repairs and maintenance                         16,000

Opening WIP inventory                                          19,000

Direct labour                                                             59,000

Indirect labour                                                          23,000

Indirect materials                                                      13,000

Other manufacturing overhead                             4,000

Tax on factory building (a cost)                             3,000

Marketing expenses                                    37,000

Opening finished goods inventory            27,000

Factory electric power                                             17,000

Closing WIP inventory                                            26,000

Depreciation of factory building                            9,000

Office expenses                                                       43,000

Question

i. Calculate the Cost of Goods Manufactured;  

ii. Calculate the Cost of Sales.  

[Note: Some costs are Not Relevant]

2. QRS Inc. produces component parts that are used in laptop computers. One part, the hard-drive, is manufactured in a single processing department. No hard-drives were in process on 31 May, and QRS started production on 12,000 units during June. Completed production for June totalled 9,900 units. The 30 June WIP was 20% complete as to direct materials and 30% complete as to conversion costs. Direct materials costing $6,192 were placed in production during June, and direct labour of $5,100 and factory overhead of $2,271 were applied to the manufacture of the hard-drives.

Question:

i. Calculate the number of:

a. equivalent units of production, and  

b. the equivalent unit costs for June.

ii. Calculate the total cost of:

a. units completed and transferred to finished goods inventory and  

b. units still in process at 30 June.  

Answer 1

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KLM
Answer i
Cost of goods manufactured	Amount $
Direct materials used	53,000.00
Direct Labor	59,000.00
Manufacturing Overhead
Depreciation of factory equipment	11,000.00
Factory repairs and maintenance	16,000.00
Indirect materials	13,000.00
Indirect Labor	23,000.00
Other manufacturing overhead	4,000.00
Tax on factory building	3,000.00
Factory electric power	17,000.00
Depreciation of factory building	9,000.00
Total Manufacturing Overhead	96,000.00
Total Manufacturing costs	208,000.00
Beginning Work in process inventory	19,000.00
Total cost of work in process	227,000.00
Less: Ending Work in process inventory	26,000.00
Cost of goods manufactured	201,000.00
Answer ii
Cost of sales	Amount $
Beginning Finished goods inventory	2,7000.00
Cost of goods manufactured	201,000.00
Cost of goods available for sale	228,000.00
Less: Finished goods inventory, ending	34,000.00
Cost of goods sold	194,000.00
Add: Operating Expenses
Marketing expenses	37,000.00
Office expenses	43,000.00
Cost of sales	274,000.00

QRS
Painting Department
Cost of Production Report- FIFO
Schedule of equivalent units	Whole Units
Beginning WIP	-
Units started	12,000.00
Units to account for	12,000.00

	Whole Units	Material	Conversion
Beginning WIP	-	-	-
Units started and completed in same month	9,900.00	9,900.00	9,900.00
Ending WIP	2,100.00	420.00	630.00
Units accounted for	12,000.00
Equivalent units of production		10,320.00	10,530.00	Answer i a
Computation of per unit costs
Costs to be accounted for	Current	Equivalent units	Unit cost	Answer i b
Material	6,192.00	10,320.00	0.60
Conversion	7,371.00	10,530.00	0.70
Total	13,563.00		1.30
Assignment of Costs	Amount $	Amount $
Cost of beginning WIP		-
Cost to complete WIP
DM	-
CC	-	-
Cost of Units started and completed in same month		12,870.00
Cost of goods manufactured		12,870.00		Answer ii a
Ending WIP
DM	252.00
CC	441.00
Costs of ending WIP		693.00
Total Costs accounted for		13,563.00		Answer ii b