Exercise
- Ron Williams recently took over as the controller of Johnson $others Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report first quarter numbers.
For the previous month (March 2011) Ron was able to piece together the following information:
| Direct materials purchased | $ 240,000 |
| Work-in-process inventory, 3/1/2011 | $ 70,000 |
| Direct materials inventory, 3/1/2011 | $ 25,000 |
| Finished goods inventory, 3/1/2011 | $ 320,000 |
| Conversion Costs | $ 660,000 |
| Total manufacturing costs added during the period | $ 840,000 |
| Cost of goods manufactured | 4 times direct materials used |
| Gross margin as a percentage of revenues | 20% |
| Revenues | $ 1,037,500 |
Instructions Calculate the cost of:
- Finished goods inventory, 3/31/2011
- Work-in-process inventory, 3/31/2011
- Direct materials inventory, 3/31/2011
- Hiwot Pharmaceuticals Share Company manufactures a single product. The following data present transactions and additional information for November 2007, the company’s first month of operation:
Direct materials purchased on account $58,000
Direct materials issued to production 40,000
Direct labor costs accrued 26,000
Factory insurance expired 3,000
Factory utility paid 2,500
Factory depreciation 6,000
Finished goods, November 30 3,100 units
Indirect materials purchased on account 5,000
Indirect materials issued to production 2,000
Indirect labor costs paid 8,000
Marketing depreciation 1,800
Miscellaneous office expenses 7,000
Miscellaneous marketing expenses 5,500
Office depreciation 2,500
Office salaries and wages 8,000
Sales on account 106,000 ($20 per unit)
Sales salaries and wages 9,000
Work in process, November 30 14,000 (4,000 units)
Required: Using perpetual inventory system, determine
- units sold in November
- unit manufactured in November
- total cost of goods manufactured in November
- unit cost of goods manufactured in November
- prepare income statement for November
- Cost of goods sold for Fews Share Company for June 2007 was $350,000. Work in process inventory on June 30, 2007 was 95% of work in process inventory on June 1, 2007. Manufacturing overhead costs are determined to be 80% of direct labor costs. During June 2007, $110,000 of direct materials were purchased. Other information for June 2007 follows:
June 1, 2007 June 30, 2007
Direct materials $22,200 $19,000
Work in process 40,000 ?
Finished goods 108,500 105,000
Required: For June 2007
- prepare a schedule to compute prime costs incurred
- prepare a schedule to compute conversion costs incurred
- prepare a schedule of cost of goods manufactured
- prepare a schedule of cost of goods sold
