The balances in the perpetual inventory accounts of Anditon Manufacturing Corpor

Question

The balances in the perpetual inventory accounts of Anditon Manufacturing Corporation at the beginning and end of the current year are as follows Beginning of Year End of Year Inventory accounts: Materials Work in Process Finished Goods Inventory $126,000 $222,000 75,000 238,000 109,000 325,000 The total dollar amounts debited and credited during the year to the accounts used in recording manufacturing activities are as follows Debit Entries Credit Entries Account: Materials Inventory Direct Labor Manufacturing Overhead Work in Process Inventory Finished Goods Inventory $2,410,000 1,189,0e0 893,600 992,000 893,600 Required a. Using these data, state or compute for the year the following amounts b. Prepare a schedule of the cost of finished goods manufactured

Explanation / Answer

Solution a:

1. Direct material purchased = Debit to material inventory = $2,410,000

2. Direct material used = Beginning material inventory + Direct material purchases - Ending material inventory

= $222,000 + $2,410,000 - $126,000 = $2,506,000

3. Payments of direct labor payroll = Debit to direct labor = $1,189,000

4. Direct labor assigned to production = Credit to direct labor = $992,000

5. Total manufacturing cost charged to WIP account during the year = Direct material used + Direct labor assigned to production + Manufacturing overhead applied

= $2,506,000 + $992,000 + $893,600 = $4,391,600

6. Cost of finished goods manufactured = Beginning WIP + Manufacturing cost charged to WIP During the year - Ending WIP

= $75,000 + $4,391,600 - $109,000 = $4,357,600

7. Cost of goods sold = Beginning finished goods inventory + Cost of finished goods manufactured - Ending finished goods inventory

= $238,000 + $4,357,600 - $325,000 = $4,270,600

8. Total amount to be classified as inventory in the year end balance sheet = Ending material inventory + Ending WIP Inventory + Ending Finished goods inventory

= $126,000 + $109,000 + $325,000 = $560,000

Solution B:

Andition Manufacturing Corp. Statement of Cost of finished goods manufactured Particulars Amount Beginning Work in Process Inventory $75,000.00 Direct materials used $2,506,000.00 Direct labor $992,000.00 Factory overhead $893,600.00 Total manufacturing cost $4,391,600.00 Cost of all goods in process during the year $4,466,600.00 Less: Ending Work in Process Inventory $109,000.00 Cost of finished goods manufactured $4,357,600.00

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