The following beginning and ending inventory balances apply to XYZ\'s 2011 accou
ID: 2497675 • Letter: T
Question
The following beginning and ending inventory balances apply to XYZ's 2011 accounting period:
During 2011, the company purchased $234,00o direct raw materials. It incurred $180,000 of direct labor costs for the year and allocated $260,000 of manufacturing overhead costs to work in process. There was no overapplied or underapplied overhead. Revenue from goods sold during the year was $800,000.
a. The amount of cost of goods manufactured (amount transferred from WIP to finish goods) was
b. What was XYZ's gross margin in 2011?
c. What was the amount of raw materials used in production during 2011?
Beginning Ending Raw Materials Inventory $24,000 $22,000 Work in Process Inventory $32,000 $33,000 Finished Goods Inventory $20,000 $17,000Explanation / Answer
a. The amount of cost of goods manufactured (amount transferred from WIP to finish goods) was
= $180000+ $260,000 + $17,000 - $20,000 = 257000
b. What was XYZ's gross margin in 2011
Revenue = $800000
c. What was the amount of raw materials used in production during 2011
= Direct raw material purchased + Ending Work in Process Inventory - Work in Process Inventory at beginning
= $234,000 + $33,000 - $32,000 = $ 235000
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