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 $ 747,000 Direct labor 815,000 Income tax expense 100,000 General and administrative expenses 500,000 Manufacturing overhead 1,710,000 Selling expenses 500,000 a. Compute the total manufacturing costs charged to work in process for the current year: (Omit the "$" sign in your response.) Total manufacturing costs $ b. Compute the cost of finished goods manufactured for the current year: (Omit the "$" sign in your response.) Cost of finished goods manufactured $ c. Compute the cost of goods sold for the current year: (Omit the "$" sign in your response.) Cost of goods sold $ d. Compute the gross profit on sales for the current year: (Omit the "$" sign in your response.) Gross profit on sales $ e. Compute the ending inventories of (1) work in process and (2) finished goods for the current year: (Omit the "$" sign in your response.) (1) Ending inventory of work in process $ (2) Ending inventory of finished goods $ check my work

Explanation / Answer

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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 $95,000 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 $ 794,000
Direct labor 895,000
Income tax expense 100,000
General and administrative expenses 500,000
Manufacturing overhead 1,530,000
Selling expenses 500,000

a.

Compute the total manufacturing costs charged to work in process for the current year: (Omit the "$" sign in your response.)

Total manufacturing costs $

b.

Compute the cost of finished goods manufactured for the current year: (Omit the "$" sign in your response.)

Cost of finished goods manufactured $

c.

Compute the cost of goods sold for the current year: (Omit the "$" sign in your response.)

Cost of goods sold $

d.

Compute the gross profit on sales for the current year: (Omit the "$" sign in your response.)

Gross profit on sales $

e.

Compute the ending inventories of (1) work in process and (2) finished goods for the current year: (Omit the "$" sign in your response.)


(1) Ending inventory of work in process $
(2) Ending inventory of finished goods $

sol:

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(a) Direct material     794,000.00 Direct Labour     895,000.00 Manufacturing overhead 1,530,000.00 Total manufacturing cost ,a 3,219,000.00 Total cost incurred for finished goods = 50*60,000 b       3,000,000 There cost of production incurred for Work in process c = a-b     219,000.00 Therefore total manufacturing cost charged to work in process = $219,000 (b) Cost of finished goods manufactured = 50 * 60,000       3,000,000 ( c) Cost of goods sold for the current year Manufacturing cost       2,880,000 Add: General and administrative expense (500000/50*48)         480,000 Add: Selling expenses         500,000 Cost of goods sold       3,860,000 (d) Total Sales ( 95000*48)       4,560,000 less: Cost of goods sold       3,860,000 Gross profit         700,000 Less: Income tax         100,000 Net profit         600,000 (e) Ending Work in process ( c )         219,000 Ending Finished goods (60,000*2) + (500,000/50*2)         140,000

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