Question

In: Accounting

Just before class starts, you realize that you have mistakenly recycled the second page of your...

Just before class starts, you realize that you have mistakenly recycled the second page of your cost accounting homework assignment. Fortunately, you still have the first page of the printout from your spreadsheet (shown below) and you remember that you were able to determine the items on the recycled page from this information.


Direct materials inventory, January 1	$	2,440
Direct materials inventory, December 31		2,258
Work-in-process inventory, January 1		5,070
Work-in-process inventory, December 31		6,650
Finished goods inventory, January 1		23,120
Finished goods inventory, December 31		24,820
Cost of goods manufactured during this year		601,740
Total manufacturing costs		603,320
Direct labor		267,400
Manufacturing overhead		224,000
Average selling price per unit		17
Gross margin percentage (as a percentage of sales)		37	%

Required:

a. Find the cost of goods sold.

b. Find the direct materials used.

c. Find the purchases of direct materials. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.)

d. Find the sales revenue. (Round your final answer to the nearest whole dollar.)

Expert Solution

(a) . Cost of goods sold can be find out by preparing finished goods account

Finished goods a/c

Particulars	debit	particulars	credit
To bal b/d	23120	by cost of goods sold (bal fig.)	600040
To WIP (cost of goods manufactured)	601740	by bal c/d	24820

Therefore, we have cost of goods sold aa $600040.

(B) . We know that total manufacturing cost = Direct material used + direct labour + overhead

Accordingly , 603320 = direct material used + 267400+224000

Therefore direct material used = 603320-267400-224000

= 111920

Therefore, direct material used = $111920.

(C) . Purchases of direct material can be easily found by preparing T account of direct material

Direct material

Particulars	debit	particulars	credit
To bal b/d	2440	By work in process (direct material used)	111920
To accounts payable (direct material purchased)	111738	By bal c/d	2258

Therefore, direct material purchased is $111738.

(D). We have gross margin percentage as 37% of sales thus 73% is the cost of goods sold

Thus, sales revenue = 600040/73% =$821973.

Sales revenue = $821973.

ekkarill92 answered 2 years ago

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