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 $100,000 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.

Required:

a. Compute the total manufacturing costs charged to work in process for the current year.

b. Compute the cost of finished goods manufactured for the current year.

c. Compute the cost of goods sold for the current year.

d. Compute the gross profit on sales for the current year.

e. Compute the ending inventories of (1) work in process and (2) finished goods for the current year.

a. Total manufacturing cost:

b. cost of finsihed goods manufactured:

c. cost of goods sold

d. gross profit on sales:

e-1. ending inventory of work in process:

e-2. ending inventory of finieshed goods:

Direct materials used $ 754,000 Direct labor 803,000 Income tax expense 100,000 General and administrative expenses 500,000 Manufacturing overhead 1,610,000 Selling expenses 500,000

Explanation / Answer

a)total manufacturing costs charged to work in process for the current year =Direct material+ direct labor + overhead

      = 754000+803000+1610000

       = 3167000

b)cost of finished goods manufactured = units completed * unit cost

                             = 50*60000 = 3,000,000

c)cost of goods sold =unit sold *unit cost

      = 48*60000

       = $ 2,880,000

d)Gross profit on sales = sales - cost of goods sold

              =[48*100000]-2,880,000

              = 4,800,000 - 2,880,000

             = 1920000

e)work in process (ending inventory ) =Total manufactuing cost -cost of goods manufactured

      = 3167000-3000000

        = 167000

e-2)Ending inventory of finished goods = units in ending inventory * unit cost

            =[50-48] *60000

             = 2*60000

              = 120000

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