Materials Inventory Work in process Finished goods Estado de costo de producción y venta
-0- -0- -0-
Units Units Units Units Units Units Inventario inicial de materias primas
Units Units Units Mas Compras netas
= Materias primas disponibles
Menos Inventario final de materias prim
Cost of sales = Materiales directos utilizados
Mas Mano de obra directa
Units Mas Costos indirectos de fabricación
= Costo de producción
Mas Inventario inicial de producción e
= Costo total de producción
Menos Inventario final de producción
= Costo de producción terminada
Mas Inventario inicial de producción te
= Costo de producción terminada disp
Menos Inventario final de producción
1 Cost definitions
Avery Corporation’s northwestern factory provided the following information for the last
calendar year:
Beginning Inventory:
Direct materials $50,800
Work in process 58,500
Ending Inventory
Direct materials $21,500
Work in process 23,500
During the year, direct materials purchases amounted to $150,000, direct labor cost was
$200,000 and overhead cost was $324,700. There were 100,000 units produced.
Required:
1. Calculate the total cost of direct materials used in production.
2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost.
3. From the unit manufacturing cost calculated in Requirement 2, assume $1.70 is direct
materials and $3.24 is overhead. What is the prime cost per unit and the conversion
cost per unit?
2 Cost of goods manufactured and sold
Beckman Company manufactures staplers. At the beginning of November, the following
information was supplied by its accountant:
Direct materials inventory $48,500
Work in process inventory 10,000
Finished goods inventory 10,075
During November, direct labor cost was $22,000, direct materials purchases were $70,000 and
the total overhead cost was $216,850. The inventories at the end of November were:
Direct materials inventory $15,900
Work in process inventory 6,050
Finished goods inventory 8,475
Required:
1. Prepare a cost of goods manufactured statement for November.
2. Prepare a cost of goods sold schedule for November.
3 Income statement, Cost Concepts, Service Company
Dorothy Gotay owns and operates three Compufix shops in the Boston area. Compufix repairs
and upgrades computers on site. In August, purchases of materials equaled $9,750, the
beginning inventory of materials was $850, and the ending inventory of materials was $950.
Payments for direct labor during the month totaled $18,570. Overhead incurred was $15,000.
The Boston shops also spent $5,000 on advertising during the month. Administrative costs
(primarily accounting and legal services) amounted to $3,000 for the month. Revenues for
August were $60,400.
Required:
1. What was the cost of materials used for repair and upgrade services during August?
2. What was the prime cost for August?
3. What was the conversion cost of services for August?
4. Prepare an income statement for August.
4 Cost of Goods manufactured and sold
Thomson Company, a manufacturing firm, has supplied the following information from its
accounting records for the last calendar year:
Direct labor cost $371,500
Purchases of direct materials 160,400
Freight-in on materials 1,000
Factory supplies used 37,800
Factory utilities 46,000
Commissions paid 80,000
Factory supervision 190,000
Advertising 23,900
Material handling 26,750
Work in process inventory, January 1 201,000
Work in process inventory, December 31 98,000
Direct materials inventory, January 1 47,000
Direct materials inventory, December 31 17,000
Finished goods inventory, January 1 28,000
Finished goods inventory, December 31 45,200
Required:
1. Prepare a cost of goods manufactured and sold statement.
5 Direct material cost, Prime cost, Conversion cost, Cost of goods manufactured
Hubert Company provided the following information for last year:
Beginning inventories:
Direct materials $52,700
Work in process 25,000
Finished goods 75,000
Ending inventories
Direct materials $42,700
Work in process 50,000
Finished goods 140,000
During the year, direct materials purchases amounted to $270,000, direct labor cost was
$304,000 and overhead cost was $506,000. During the year, 25,000 units were completed.
Required:
1. Calculate the total cost of direct materials used in production.
2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost.
3. Of the unit manufacturing cost calculated in Requirement 2, assume $11 is direct
materials and $12 is direct labor. What is the prime cost per unit? Conversion cost per
unit?
6 Income statement, cost of goods manufactured
Jordan Company produced 150,000 floor lamps during the past calendar year. Jordan had
2,500 floor lamps in finished goods inventory at the beginning of the year. At the end of the
year, there were 11,500 floor lamps in finished goods inventory. The lamps sell for $50 each.
Jordan’s accounting records provide the following information for the past year:
Purchases of direct materials $1,675,000
Direct materials inventory, January 1 380,000
Direct materials inventory, December 31 327,000
Direct labor 2,000,000
Indirect labor 790,000
Depreciation, Factory building 1,100,000
Depreciation, Factory equipment 630,000
Property taxes on the factory 65,000
Factory utilities 150,000
Insurance on the factory 200,000
Research and development 120,000
Salary, sales supervisor 85,000
Commissions, salesperson 370,000
General administration 390,000
Work in process inventory, January 1 450,000
Work in process inventory, December 31 750,000
Finished goods inventory, January 1 107,500
Finished goods inventory, December 31 489,000
Required:
1. Prepare a cost of goods manufactured statement
2. Compute the cost of producing one floor lamp last year.
3. Prepare an income statement
7 Unit flows
Baker Corp. manufactures metal clips. Two feet of wire is used in each clip. During June, its first
month of operation, Baker purchased 15,000 feet of wire and used 10,000 ft. in production of
metal clips; 4000 metal clips are completed and transferred to finished goods. Sales during
June amounted to 3,500 clips.
Required:
1. Complete the following T-account analysis by showing the number of units flowing
through the manufacturing process and cost of sales for the month of June.
Materials Inventory Work in process Finished goods
-0- -0- -0-
Units Units Units Units Units Units
Units Units Units
Cost of sales
Units
1 If total manufacturing costs (direct materials, plus direct labor, plus overhead) amounted
to $50,000, of which $8,000 was attributed to end of period work in process, what was the
cost of goods completed during the period?
2. What was the cost per unit for finished clips?
3. What was the cost of sales for the period?
8 Manufacturing Statements
Garrett Company supplies NASA with electronic components for its computer systems. You are
furnished the following data (in thousands of dollars):
Inventories 1/1/14 31/12/14
Raw materials $10 $7
Work in process 20 25
Finished goods 32 12
Manufacturing costs incurred during x1
Raw materials purchased $108
Direct labor used $247
Indirect manufacturing cost:
Indirect manufactured used $5
Indirect labor used 87
Utilities 4
Depreciation- factory building & equipment 15
Other 20 $131
Required
1. Prepare a statement of costs of goods manufactured and sold for x1
2. Compute a) prime costs, and b) conversion costs
3. Enter all appropriate amounts T account for work in process. Draw a circle around and
label the amounts that would be included in total manufacturing costs for the period.
Identify the amount(s) included in the calculation cost of good manufactured.
9 Cost definitions and calculations, solving for unknowns
For each of the following independent situations, calculate the missing values:
1. The B plant purchased $352,000 of direct materials during April. Beginning direct
materials inventory was $21,000 and direct materials used in production were
$300,000. What is the ending direct materials inventory?
2. A company produced 12,000 units at an average cost $6 each. The beginning inventory
of finished goods as $4,680. ) The average unit cost of beginning inventory was $5.85)
Aston sold 8,900 units. How many units remain in ending finished goods inventory?
3. Beginning WIP was $50,000, and ending WIP was $18,750. If Manufacturing costs
added were $93,000, what was the cost of goods manufactured?
4. If the conversion cost is $32 per unit, the prime cost is $19.5 and the manufacturing
cost per unit is $39.50, what is the direct materials cost per unit?
5. Manufacturing costs added for October were $156,900. Prime cost was $90,000 and
beginning WIP was $60,000. The cost of goods manufactured was $125,000. Calculate
the cost of overhead for October and the cost ending WIP.
