Question

use the following information to answer questions 1,2 and 3

geneva steel corporation produces large sheets of heavy gauge steel. the company showed the following amounts relating to its production for the year just completed

direct materials used in production $110,000

direct labour costs of the year $55,000

work in process, beginning $22,000

finished goods, beginning $45,000

costs of goods available for sale $288,000

costs of goods sold $238,000

work in process, ending $16,000

1. what was the balance of the finished goods inventory at the end of the year?

a) 95,000

b) 50,000

c)193,000

d) 45,000

2. what was the manufacturing overhead cost of the year?

a) 84,000

b) 78,000

c) 56,000

d) 72,000

3. what was the costs of goods manufactured for the year?

a) 171,000

b) 160,000

c) 243,000

d) 244,000

Answer 1

Requirement 1:- What was the balance of the finished goods inventory at the end of the year?

Solution:- (b) $50,000

Calculation of balance of the finished goods inventory

Particulars	Amount
Cost of goods available for Sale	$288,000
Less: Cost of goods sold	($238,000)
Finished Goods Inventory	$50,000

Requirement 2:- What was the manufacturing overhead cost of the year?

Solution:- (d) $72,000

Calculation of Manufacturing cost

Particulars	Amount
Cost of goods sold	$238,000
Add: Ending Work in process	$16,000
Less: Beginning work in process	($22,000)
Add: Ending Finished Goods	$50,000
Less: Beginning Finished Goods	($45,000)
Total manufacturing Cost	$237,000

Total Manufacturing cost = Direct Material + Direct Labor + Manufacturing Overhead

$237,000 = $110,000 + $55,000 + Manufacturing Overhead

Manufacturing Overhead = $237,000 - $165,000

Manufacturing Overhead cost = $72,000

Requirement 3:- What was the costs of goods manufactured for the year?

Solution:- (a) $171,000

Calculation of Costs of goods manufactured

Particular	Amount
Direct Material used in Production	$110,000
Add: Direct Labor Costs	$55,000
Add: Beginning Work in Process	$22,000
Less: Ending Work in Process	($16,000)
Costs of Goods Manufactured	$171,000

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