Question

                                               Costs

Raw materials purchased	$ 75,000
Direct Labor	55,000
Indirect labor	33,000
Factory equipment maintenance and depreciation	15,000
Factory rent	36,000
Factory supplies	6,000
Selling & administrative expenses	100,000

Inventories	Beginning Balance	Ending Balance
Raw Materials	$ 5,000	$20,000
Work in Process	25,000	30,000
Finished Goods	20,000	35,000

Required:   Calculate the cost of raw materials used in production.

Required:  Calculate the cost of goods manufactured

Calculate the cost of goods sold.

Required:  Calculate the prime costs

  Calculate the conversion costs.

Answer 1

Solution

Cost of raw materials used in production	$         60,000.00
Cost of Goods Manufactured	$       200,000.00
Cost of goods sold	$       185,000.00
Prime cost	$       115,000.00
Conversion cost	$       145,000.00

Working

Prime cost = Direct material + Direct labor

Conversion cost = Direct labor + Overhead

Schedule of Cost of Goods Manufactured and sold
Direct Material
Raw material Inventory Beginning	$            5,000.00
Raw material Purchased	$         75,000.00
Raw material available for use	$         80,000.00
Less: Raw material Inventory Ending	$         20,000.00
Direct Material Used		$         60,000.00
Direct labor		$         55,000.00
Manufacturing overheads
Indirect labor	$         33,000.00
Factory equipment maintenance and depreciation	$         15,000.00
Factory rent	$         36,000.00
Factory supplies	$            6,000.00
Total Manufacturing overheads		$         90,000.00
Total manufacturing Cost During the month		$       205,000.00
Add: Work in process Beginning		$         25,000.00
Total Work in Process		$       230,000.00
Less: Work in progress Ending		$         30,000.00
Cost of Goods Manufactured		$       200,000.00
Add: Beginning finished goods inventory		$         20,000.00
Goods available for sale		$       220,000.00
Less: Ending finished goods inventory		$         35,000.00
Cost of goods sold		$       185,000.00