Question

A company manufactures jackets and provided you with the following production info for the period:

Beginning balance finished goods............ $120,000

Beginning balance work-in-process.......... $35,000

Beginning balance in raw materials.......... $18

Ending balance in finished goods............. $105,000

Ending balance work-in process............... $37,500

Ending balance raw materials................... $128

Cost of goods manufactured..................... $ 147,500

Manufacturing costs................................... $150,000

Manufacturing overhead............................ $25,000

Direct labor................................................ $55,000

A. How much raw material was used during the period?

B. What was the gross margin at the end of the period if the company spent $12,500 on advertising and had sales of $360,000?

Answer 1

		A	Manufacturing Cost	$150,000
		B	Direct labor	$55,000
		C	Manufactring Overhead	$25,000
		D=A-B-C	Raw materials used	$70,000
			FINISHED GOODS INVENTORY
				Debit	Credit
			Beginning balance	$120,000
			Cost of goods manufactured	$147,500
			Cost of goods sold		$162,500	(120000+147500-105000)
			Ending Balance	$105,000
			WORK IN PROCESS INVENTORY
				Debit	Credit
			Beginning balance	$35,000
			Direct Labor	$55,000
			Manufacturing Overhead	$25,000
			RawMaterials	$        70,000		(150000-55000-25000)
			Cost of goods manufactured		$147,500
			Ending Balance	$37,500
			RAW MATERIAL INVENTORY
				Debit	Credit
			Beginning balance	$18
			Raw materials purchased	$        70,110		(70000+128-18)
			Raw materialsused		$ 70,000
			Ending Balance	$128
		A	Raw Materials Used	$        70,000
		B	Gross Margin
		a	Saless		$360,000
		b	Cost of goods sold	$162,500
		c	Advertising expense	$12,500
		d=b+c	Total expense		$175,000
		e=a-d	Gross Margin		$185,000