1. Award: 12 out of 12.00 points
The controller at Lawrence Components asks for your help in sorting out some cost information. She
is called to a meeting, but hands you the following information for April.
Prime costs, April $ 98,000
Total manufacturing costs, April 178,000
Cost of goods manufactured, April 180,000
Cost of goods sold, April 142,000
Direct materials inventory, April 30 10,000
Work-in-process inventory, April 1 6,000
Finished goods inventory, April 30 48,000
Direct materials purchased, April 56,000
Direct labor costs, April 40,000
Required:
a. Compute the direct material used for the month of April.
b. Compute the direct material inventory as of April 1.
c. Compute the conversion cost for the month of April.
d. Compute the work-in-process inventory as of April 30.
e. Compute the manufacturing overhead for the month of April.
f. Compute the finished goods inventory as of April 1.
a. Direct material used $ 58,000
b. Direct materials inventory $ 12,000
c. Conversion cost $ 120,000
d. Work-in-process inventory $ 4,000
e. Manufacturing overhead $ 80,000
f. Finished goods inventory $ 10,000
References
Worksheet Learning Objective:
02-01 Explain the
basic concept of
"cost."
Difficulty: 2 Learning Objective:
Medium 02-06 Identify the
components of a
product’s costs.
The controller at Lawrence Components asks for your help in sorting out some cost information. She
is called to a meeting, but hands you the following information for April.
Prime costs, April $ 98,000
Total manufacturing costs, April 178,000
Cost of goods manufactured, April 180,000
Cost of goods sold, April 142,000
Direct materials inventory, April 30 10,000
Work-in-process inventory, April 1 6,000
Finished goods inventory, April 30 48,000
Direct materials purchased, April 56,000
Direct labor costs, April 40,000
Required:
a. Compute the direct material used for the month of April.
b. Compute the direct material inventory as of April 1.
c. Compute the conversion cost for the month of April.
d. Compute the work-in-process inventory as of April 30.
e. Compute the manufacturing overhead for the month of April.
f. Compute the finished goods inventory as of April 1.
a. Direct material used $ 58,000
b. Direct materials inventory $ 12,000
c. Conversion cost $ 120,000
d. Work-in-process inventory $ 4,000
e. Manufacturing overhead $ 80,000
f. Finished goods inventory $ 10,000
Explanation:
a.
Prime costs = Direct material used + Direct labor costs
Direct material used = Prime costs − Direct labor costs
= $98,000 − $40,000
= $58,000
b.
Direct material used = Beginning inventory + Purchases − Ending inventory
Direct material, beginning inventory = Direct material used − Purchases + Ending inventory
= $58,000 − $56,000 + $10,000
= $12,000
c.
Total manufacturing costs = Prime costs + Conversion costs − Direct labor cost
Conversion cost = Total manufacturing costs − Prime costs + Direct labor cost
= $178,000 − $98,000 + $40,000
= $120,000
d.
Work-in-process, ending = Work-in-process, beginning + Total manufacturing costs − Cost of goods
manufactured
= $6,000 + $178,000 − $180,000
= $4,000
e.
Conversion cost = Direct labor costs + Manufacturing overhead
Manufacturing overhead = Conversion costs − Direct labor costs
= $120,000 − $40,000
= $80,000
f.
Cost of goods sold = Finished goods, beginning + Cost of goods manufactured − Finished goods,
ending
Finished goods, beginning = Cost of goods sold − Cost of goods manufactured + Finished goods,
ending
= $142,000 − $180,000 + $48,000
= $10,000
