Question Two PART B Futurama Mechanics Ltd manufactures and sells household clea

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Question Two PART B Futurama Mechanics Ltd manufactures and sells household cleaning robots. At the beginning of the year, the company had a Raw Materials inventory balance of $335,000, a total of $58,000 in Work-in-Process inventory and a Finished Goods inventory balance of 125,000. During the year, raw materials were purchased at a cost of $545,000 and at the end of the year Raw Materials inventory had a balance of $248,000 and Work-In Process had a balance of $172,500. The production of cleaning robots incurred direct labour costs of $215,000. Actual manufacturing overhead costs amounted to $305,000. By the end of the year, cleaning robots with a cost of $1,027,000 had been completed. Of these, cleaning robots costing $550,000 were sold, at a mark-up of 20% on cost price. The company uses normal costing and the budgeted manufacturing overhead rate for the year was $10 per direct labour hour. The company had budgeted for 30,500 direct labour hours for the year but only 29,450 direct labour hours were worked. Required (a) Prepare a schedule of cost of goods manufactured for the year. (10 marks)

Explanation / Answer

a.

Schedule of Cost of Goods Manufactured

For the year ended......

Futurama Mechanics Limited

Schedule of Cost of Goods Manufactured

For the year ended......

Direct Materials used in Production Beginning raw materials inventory $ 335,000 Add: Raw Materials Purchased 545,000 Total Raw Materials Available 880,000 Less: Ending raw materials inventory (248,000) $ 632,000 Direct Labor 215,000 Manufacturing Overhead Applied ( 29,450 hours x $ 10 per DLH) 294,500 Total Manufacturing Costs $ 1,141,500 Add: Beginning Work in Process 58,000 Total cost of Work in Process 1,199,500 Less: Ending Work in Process (172,500) Cost of Goods Manufactured $ 1,027,000

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