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 $ 774,000 Direct labor 818,000 General and administrative expenses 500,000 Income tax expense 100,000 Manufacturing overhead 1,780,000 Selling expenses 500,000 Instructions 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 for the current year.

What is 1)total manufacturing cost 2) ending inventory of work in process 3) ending inventory of finished goods?

Explanation / Answer

In absence of any information, value of Ending WIP is considered to be same as of Cost of unit manufactured

Particulars Units $ Direct Material 774000 Direct Labour 818000 Manufacturing overhead 1780000 Total Mfg cost 3372000 Less Ending WIP ( @ 60000) 6 -360000 Cost to be shown under WIP 3012000 Less :Beginning FG 0 Less : Ending FG ( @ 60000) 2 -120000 Cost of goods Sold 3492000 Particulars Units $ Sales 48 5040000 Less Cost of goods sold 3492000 Gross Profit 1548000 Less Selling & Admin exps 1100000 Operating Income 448000

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