Road Warrior Corporation began operations early in the current year, building lu

Question

Road Warrior Corporation began operations early in the current year, building luxury motor homes. During the year, the company started and completed 50 motor homes at a cost of $60,000 per unit. Of these, 48 were sold for $105,000 each and two remain in finished goods inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows. Direct materials used Direct labor Income tax expense General and administrative expenses Manufacturing overhead Selling expenses s 784,000 965,000 100,000 500,000 1,630,000 500,000 Required

Explanation / Answer

Solution:

From the given data we need to find the given requirements

Answer (a):

.

Answer (b): The cost of finished goods manufactured :

= 50 * $60,000

= $3,000,000

.

Answer (c): Cost of goods sold for the current year:

Answer (d): The gross profit on sales for the current year:

Answer (e):

1. Ending inventory of work in process = $379,000

2. Ending inventory of finished goods ($60,000 * 2) + (500,000 / 50*2) = $140,000

Particulars Amount ($) Direct material 784,000 Direct labour 965,000 Manufacturing overhead 1,630,000 Total manufacturing cost 3,379,000 Less: Total cost incurred for finished goods (50 * 60,000) 3,000,000 The cost of production incurred for work in process 379,000

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