Various cost and sales data for Meriwell Company for the just-completed year fol
ID: 2543303 • Letter: V
Question
Various cost and sales data for Meriwell Company for the just-completed year follow: Finished goods inventory, beginning Finished goods inventory, ending Depreciation, factory Administrative expenses Utilities, factory Maintenance, factory Supplies, factory Insurance, factory Purchases of raw materials Raw materials inventory, beginning Raw materials inventory, ending Direct labour Indirect labour Work-in-process inventory, beginning Work-in-process inventory, ending Sales Selling expenses $ 21,000 42,000 15,000 109,000 9,000 43,000 11,000 2,000 126,000 8,000 6,000 71,000 16,000 18,000 20,000 505,000 70,000 Required 1. Prepare a schedule of cost of goods manufactured MERIWELL COMPANY Schedule of Cost of Goods Manufactured For the Year Just Completed Direct materials Raw materials available for use Raw materials used in production Manufacturing overhead Total overhead costs Total manufacturing costs Cost of goods manufacturedExplanation / Answer
Solution:
Part 1 – Schedule of Cost of Goods Manufactured
Schedule of Cost of Goods Manufactured
$$
$$
Direct materials:
Raw Material Beginning inventory
$8,000
Plus: Purchases during the year
$126,000
Raw materials available for use
$134,000
Less: Raw Material ending inventory
$6,000
Raw materials used in production
$128,000
Direct Labor Costs
$71,000
Manufacturing overhead:
Depreciation, factory
$15,000
Utilities, factory
$9,000
Maintenance, factory
$43,000
Supplies Factory
$11,000
Insurance, factory
$2,000
Indirect labor
$16,000
Total overhead costs
$96,000
Total Manufacturing Cost
$295,000
Plus: Work In Process Beginning inventory
$18,000
$313,000
Less: Work IN Process ending inventory
$20,000
Cost of Goods Manufactured
$293,000
Part 2 – Income Statement
Income Statement
Sales Revenue
$505,000
Cost of Goods Sold:
Cost of Goods Manufactured (From Part 1)
$293,000
Add: Finished Goods Beginning inventory
$21,000
Goods available for sale
$314,000
Less: Finished Goods Ending Inventory
$42,000
Cost of Goods Sold
$272,000
Gross Profit
$233,000
Less: Operating Expense:
Administrative expense
$109,000
Selling Expense
$70,000
Total Operating Expense
$179,000
Operating Income
$54,000
Part 3 ---
Average Cost per unit for direct material = Cost of Direct material used $128,000 / Equivalent Unit 10,000 Units
= $12.80 per unit
Average Cost per unit for factory depreciation = Factory depreciation $15,000 / Equivalent Unit 10,000 Units
= $1.50 per unit
Part 4 --
Average Cost
Total Cost
Direct materials
$12.80
per unit
$153,600
(12.80*12,000)
Factory depreciation
$1.50
per unit
$18,000
(1.5*12000)
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Schedule of Cost of Goods Manufactured
$$
$$
Direct materials:
Raw Material Beginning inventory
$8,000
Plus: Purchases during the year
$126,000
Raw materials available for use
$134,000
Less: Raw Material ending inventory
$6,000
Raw materials used in production
$128,000
Direct Labor Costs
$71,000
Manufacturing overhead:
Depreciation, factory
$15,000
Utilities, factory
$9,000
Maintenance, factory
$43,000
Supplies Factory
$11,000
Insurance, factory
$2,000
Indirect labor
$16,000
Total overhead costs
$96,000
Total Manufacturing Cost
$295,000
Plus: Work In Process Beginning inventory
$18,000
$313,000
Less: Work IN Process ending inventory
$20,000
Cost of Goods Manufactured
$293,000
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