Question

In: Accounting

XYZ Company manufactured 100,000 units in 20X5 and reported the following costs: Sandpaper $ 32,000 Leasing...

XYZ Company manufactured 100,000 units in 20X5 and reported the following costs:

Sandpaper $ 32,000

Leasing costs-plant $ 384,000

Materials handling 320,000

Depreciation-equipment 224,000

Coolants & lubricants 22,400

Property taxes-equipment 32,000

Indirect manufacturing labor 275,200

Fire insurance-equipment 16,000

Direct manufacturing labor 2,176,000

Direct material purchases 3,136,000

Direct materials, 1/1/X5 384,000

Direct materials, 12/31/X5 275,200

Finished goods, 1/1/X5 672,000

Sales revenue 12,800,000

Finished goods, 12/31/X5 1,280,000

Sales commissions 640,000

Work-in-process, 1/1/X5 96,000

Sales salaries 576,000

Work-in-process, 12/31/X5 64,000

Advertising costs 480,000

Administration costs 800,000

a. What is the amount of direct materials used during 20X5?

b. What manufacturing costs were added to WIP during 20X5?

c. What amount of prime costs was added to production during 20X5?

d. What amount of conversion costs was added to production during 20X5?

e. What is cost of goods manufactured for 20X5? f. What is cost of goods sold for 20X5?

g. What is gross margin (or gross profit) for 20X5? h. What is operating income for 20X5?

Solutions

Expert Solution

XYZ Company
Cost of Goods manuafactured
Amount
Direct Material
Beginning Raw Material Inventory $                                                   3,84,000.00
Add: Purchases $                                                 31,36,000.00
Total raw material available $                                                 35,20,000.00
Less: Ending Raw Material $                                                  -2,75,200.00
Raw Material used in Production $        32,44,800.00
Direct Labor $        21,76,000.00
Indirect Manuafcturing Overhead
Sandpaper $                                                       32,000.00
Material Handling cost $                                                   3,20,000.00
Coolant and Lubricants $                                                       22,400.00
Leasing cost-Plant $                                                   3,84,000.00
Indirect Manufacturing labor $                                                   2,75,200.00
Depreciation-Equipment $                                                   2,24,000.00
Property Taxes-Equipment $                                                       32,000.00
Fire Insurance -Equipment $                                                       16,000.00 $        13,05,600.00
Total Manufacturing Cost $        67,26,400.00
Add: Work in Process January 1st, $              96,000.00
Total $        68,22,400.00
Less: Work in Process Ending Dec 31st $            -64,000.00
Cost of goods manufactured $        67,58,400.00
XYZ Company
Cost of goods sold
Amount
Beginning Finished goods Inventory=(A) $                                                   6,72,000.00
Add: Cost of goods manufactured=(B) $                                                 67,58,400.00
Cost of goods avaialable for sale(C)=(A)+(B) $                                                 74,30,400.00
Less: Ending Finished goods Inventory=(D) $                                                 12,80,000.00
Cost of goods sold (E )=(C)-(D) $        61,50,400.00
XYZ Company
Income Statement
Sales Revenue=(A) $                                             1,28,00,000.00
Less: Cost of goods sold=(B) $                                                 61,50,400.00
Gross Profit=(C )=(A)-(B) $                                                 66,49,600.00
Selling and Administraitve Expenses
Sales Commission $                                                   6,40,000.00
Sales Salaries $                                                   5,76,000.00
Advertising cost $                                                   4,80,000.00
Administrative cost $                                                   8,00,000.00
Total Selling and Administrative Expense=(D ) $                                                 24,96,000.00
Net Operating Income=(E )-(F) $                                                 41,53,600.00
a) Direct Material used during 20X5= $                                                 32,44,800.00
b) Manufacturing cost added to Work in Process $                                                 67,26,400.00
c) Prime cost includes only Direct Material and Direct Labor cost=($3244800+$2176000) $                                                 54,20,800.00
d) Conversion cost includes Direct Labor and Manufacturing overhead cost=($2176000+$1305600) $                                                 34,81,600.00
e) Cost of goods manufactured $                                                 67,58,400.00
f) Cost of goods sold $                                                 61,50,400.00
g) Gross Margin $                                                 66,49,600.00
h) Net Operating Income $                                                 41,53,600.00

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