A company manufactures jackets and provided you with the following production in
ID: 2332119 • Letter: A
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?
Explanation / Answer
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
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