Navajo Company is a manufacturing firm. Presented below is selected information
ID: 2467397 • Letter: N
Question
Navajo Company is a manufacturing firm. Presented below is selected information from its 2008 accounting records.
Raw materials 1/1/08 $30,800
Transportation-out $8,000
Raw materials inventory 12/31/08 $37,400
Selling expenses $300,000
Work in process inventory 1/1/08 $72,600
Administrative expenses $180,000
Work in process inventory 12/31/08 $61,600
Purchase discounts $10,640
Finished goods inventory 1/1/08 $35,200
Purchase returns and allowances$6,460
Finished goods inventory 12/31/08 $22,000
Interest Expense $15,000
Purchases $278,600
Direct labor $440,000
Transportation-in $6,600
Manufacturing overhead $330,000
Instructions
Compute raw materials used
Compute the cost of goods manufactured
Compute cost goods of sold
Indicate how inventories would be reported in the December 31,2008 balance shit.
Explanation / Answer
Computation of raw material used, cost of goods manufactured and cost of goods sold by N Company for the year 2008.
N Company
Statement of raw material used, Cost of Goods Manufacture and cost of goods sold for the year 2008
Particulars
Total Amount in $
Total Amount in $
Direct Materials:
Beginning raw materials inventory
30,800
Add: Raw materials purchased (net)
278,600
Less: Purchase returns and allowance
6,460
Less: Transportation - In
6,600
Materials available for consumption
296,340
Less: Ending raw materials inventory
37,400
Cost of raw material used
258,940
Direct Labor
440,000
Prime Cost:
698,940
Add: Factory overheads
Manufacturing overhead
330,000
Total Manufacturing costs
1,028,940
Add: Beginning work in process
72,600
1,101,540
Less: Closing work in process
61,600
Cost of goods manufactured
1,039,940
Add: Administrative expenses
180,000
Interest expenses
15,000
195,000
Total Cost of production
1,234,940
Add: Opening stock of finished goods
$35,200
Cost of goods available for sale
1,270,140
Less: Closing stock of finished goods
22,000
Cost of goods sold
1,248,140
Add: Selling and Distribution overheads:
Selling Expenses
300,000
Transport-out
$8,000
308,000
Total Cost
1,556,140
Therefore, in the year 2004 Raw material used is $258,940, Cost of goods manufactured is $1,039,940 and Cost of goods sold is $1,248,140.
Balance Sheet of N Company for the year ended 2008
Liabilities
$
Assets
$
$
Current Assets:
Inventory:
Ending raw materials
37,400
Closing work in process
61,600
Closing stock of finished goods
22,000
121,000
Particulars
Total Amount in $
Total Amount in $
Direct Materials:
Beginning raw materials inventory
30,800
Add: Raw materials purchased (net)
278,600
Less: Purchase returns and allowance
6,460
Less: Transportation - In
6,600
Materials available for consumption
296,340
Less: Ending raw materials inventory
37,400
Cost of raw material used
258,940
Direct Labor
440,000
Prime Cost:
698,940
Add: Factory overheads
Manufacturing overhead
330,000
Total Manufacturing costs
1,028,940
Add: Beginning work in process
72,600
1,101,540
Less: Closing work in process
61,600
Cost of goods manufactured
1,039,940
Add: Administrative expenses
180,000
Interest expenses
15,000
195,000
Total Cost of production
1,234,940
Add: Opening stock of finished goods
$35,200
Cost of goods available for sale
1,270,140
Less: Closing stock of finished goods
22,000
Cost of goods sold
1,248,140
Add: Selling and Distribution overheads:
Selling Expenses
300,000
Transport-out
$8,000
308,000
Total Cost
1,556,140
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