Chapter 2 Homework Solutions
2–3
1.
Direct materials used = $50,800 + $150,000 – $21,500 = $179,300
2.
Direct materials.........................................................
Direct labor................................................................
Overhead ...................................................................
Total manufacturing cost.........................................
Add: Beginning WIP .................................................
Less: Ending WIP .....................................................
Cost of goods manufactured...................................
$ 179,300
200,000
324,700
$ 704,000
58,500
(23,500)
$ 739,000
Unit cost of goods manufactured = $739,000/100,000 = $7.39
3.
Direct labor = $7.39 – $1.70 – $3.24 = $2.45
Prime cost = $1.70 + $2.45 = $4.15
Conversion cost = $2.45 + $3.24 = $5.69
2–5
1.
Beckman Company
Statement of Cost of Goods Manufactured
For the Month of November
Direct materials:
Beginning inventory..................................
Add: Purchases .........................................
Materials available.....................................
Less: Ending inventory.............................
Direct materials used in production ........
Direct labor........................................................
Manufacturing overhead ..................................
Total manufacturing costs added ...................
Add: Beginning work in process.....................
Less: Ending work in process.........................
Cost of goods manufactured...........................
$ 48,500
70,000
$118,500
(15,900)
$ 102,600
22,000
216,850
$ 341,450
10,000
(6,050)
$ 345,400
2.
Beckman Company
Statement of Cost of Goods Sold
For the Month of November
Cost of goods manufactured...................................................
Add: Beginning finished goods inventory .............................
Cost of goods available for sale..............................................
Less: Ending finished goods inventory .................................
Cost of goods sold ...................................................................
$ 345,400
10,075
$ 355,475
(8,475)
$ 347,000
2–7
1.
Thomson Company
Statement of Cost of Goods Manufactured
For the Year Ended December 31
Direct materials:
Beginning inventory..................................
Add: Purchases ........................................
Freight-in on materials ....................
Materials available.....................................
Less: Ending inventory.............................
Direct materials used ................................
Direct labor........................................................
Manufacturing overhead:
Material handling.......................................
Supplies .....................................................
Utilities .......................................................
Supervision and indirect labor.................
Total overhead costs ................................
Total manufacturing costs added ...................
Add: Beginning work in process.....................
Less: Ending work in process.........................
Cost of goods manufactured...........................
$ 47,000
160,400
1,000
$208,400
(17,000)
$ 191,400
371,500
$ 26,750
37,800
46,000
190,000
300,550
$ 863,450
201,000
(98,000)
$ 966,450
2.
Thomson Company
Statement of Cost of Goods Sold
For the Year Ended December 31
Cost of goods manufactured...................................................
Add: Beginning finished goods inventory .............................
Cost of goods available for sale..............................................
Less: Ending finished goods inventory .................................
Cost of goods sold ...................................................................
$ 966,450
28,000
$ 994,450
(45,200)
$ 949,250
2–8
1.
Beginning inventory, materials ...............................
+ Purchases ..........................................................
– Ending inventory, materials .............................
Materials used in production...................................
2.
Prime cost = $9,650 + $18,570 = $28,220
3.
Conversion cost = $18,570 + $15,000 = $33,570
4.
Direct materials.........................................................
Direct labor................................................................
Overhead ...................................................................
Cost of services........................................................
5.
$
850
9,750
(950)
$ 9,650
$ 9,650
18,570
15,000
$ 43,220
Compufix
Income Statement
For the Month Ended August 31
Sales revenues .........................................................................
Cost of services sold ...............................................................
Gross margin ............................................................................
Operating expenses:
Advertising .........................................................................
Administrative costs ..........................................................
Operating Income .....................................................................
$ 60,400
43,220
$ 17,180
(5,000)
(3,000)
$ 9,180
2–15
1.
Jordan Company
Statement of Costs of Goods Manufactured
For the Year Ended December 31
Direct materials:
Beginning inventory.......................................
Add: Purchases ..............................................
Materials available..........................................
Less: Ending inventory..................................
Direct materials used .....................................
Direct labor.............................................................
Manufacturing overhead:
Insurance on factory ......................................
Indirect labor...................................................
Depreciation, factory building.......................
Depreciation, factory equipment...................
Property taxes on factory ..............................
Utilities, factory ..............................................
Total manufacturing costs added ........................
Add: Beginning work in process..........................
Less: Ending work in process..............................
Cost of goods manufactured................................
2.
Unit cost = $6,363,000/150,000 = $42.42
$
380,000
1,675,000
$ 2,055,000
(327,000)
$ 1,728,000
2,000,000
$
200,000
790,000
1,100,000
630,000
65,000
150,000
2,935,000
$ 6,663,000
450,000
(750,000)
$ 6,363,000
3.
Jordan Company
Income Statement: Absorption Costing
For the Year Ended December 31
Sales (141,000* × $50) ...........................................
Cost of goods sold:
Cost of goods manufactured.........................
Add: Beginning finished goods inventory ...
Goods available for sale ................................
Less: Ending finished goods inventory .......
Gross margin .........................................................
Less:
Research and development...........................
Salary, sales supervisor ................................
Commissions, salespersons .........................
Administrative expenses ...............................
Income before taxes..............................................
*2,500 + 150,000 – 11,500 = 141,000 units sold.
$ 7,050,000
$ 6,363,000
107,500
$ 6,470,500
489,000
$
5,981,500
$ 1,068,500
120,000
85,000
370,000
390,000
$
965,000
103,500
2–16
1.
Direct materials .........................................................
Direct labor ................................................................
Manufacturing overhead ..........................................
Total manufacturing costs added............................
Add: Beginning work in process .............................
Less: Ending work in process .................................
Cost of goods manufactured ...................................
a
Conversion cost = 4 × Prime cost
$360,000 = 4(Direct materials + Direct labor)
$360,000 = 4($75,000 + Direct labor)
Direct labor = $15,000
Conversion cost = Overhead + Direct labor
$360,000 = Overhead + $15,000
Overhead = $360,000 – $15,000
Overhead = $345,000
b
Ending WIP = 2 × Beginning WIP
$435,000 + Beg. WIP – (2 × Beg. WIP) = $415,000
Beginning WIP = $20,000; Ending WIP = 2 × $20,000 = $40,000
$ 75,000
15,000a
345,000a
$ 435,000
20,000b
(40,000)b
$ 415,000
2.
Cost of goods manufactured...................................
Add: Beginning finished goods ..............................
Cost of goods available for sale..............................
Less: Ending finished goods...................................
Cost of goods sold ...................................................
*Ending finished goods = $431,500 – $373,500 = $58,000
**COGS = 0.90 × $415,000 = $373,500
$ 415,000
16,500
$ 431,500
(58,000)*
$ 373,500**