Question

Please show work:

Lean’N’Mean Manufacturing uses just-in-time inventory techniques to reduce their carrying costs. Despite having a low level of working capital, they experience significant sales and production levels. Lean’N’Mean reported the following information at year-end:

Beginning Materials Inventory	$ 2,000	Indirect Materials Used	$ 8,000
Ending Materials Inventory	2,400	Direct Labor	288,000
Beginning Work in Process	16,000	Indirect Labor	390,000
Ending Work in Process	8,000	Factory Depreciation	20,000
Beginning Finished Goods Inventory	4,800	Factory Maintenance	12,000
Ending Finished Goods Inventory	3,000	Factory Utilities	32,000
Cost of Materials Purchased	320,000	Selling & Administrative Expense	656,000

Instructions: Compute each of the following amounts, showing all work for partial credit

1.Direct material used

2. Total manufacturing overhead

3. Total manufacturing costs

4. Cost of goods manufactured

5. Cost of goods sold

6. Prime cost

7. Conversion cost

Answer 1

Answer of Part 1:

Direct Material Used = Beginning Material + Cost of Materials Purchased – Ending Materials Inventory
direct Materials Used = $2,000 + $320,000 - $2,400
Direct Materials Used = $319,600

Answer of Part 2:

Total Manufacturing Overhead = Indirect Materials + Indirect Labor + Factory Depreciation + Factory Maintenance + Factory Utilities
Total Manufacturing Overhead = $8,000 + $390,000 + $20,000 + $12,000 + $32,000
Total Manufacturing Overhead = $462,000

Answer of Part 3:

Total Manufacturing Cost = Direct Materials Used + Direct Labor + Total Manufacturing Overhead
Total Manufacturing Cost = $319,600 + $288,000 + $462,000
Total Manufacturing Cost = $1,069,600

Answer of Part 4:

Cost of Goods Manufactured = Beginning work in process + Total Manufacturing Cost – Ending Work in process
Cost of Goods Manufactured = $16,000 + $1,069,600 - $8,000
Cost of Goods Manufactured = $1,077,600