Consider the following information for Superior Window Corporation for the year
ID: 2559197 • Letter: C
Question
Consider the following information for Superior Window Corporation for the year ended December 31, 2017:
Depreciation expense – Administrative office $ 40,000
Depreciation expense – Plant and equipment 80,000
Direct labor – Wages 500,000
Direct materials inventory, Dec. 31, 2017 20,000
Direct materials inventory, Jan 1, 2017 30,000
Direct material purchases 180,000
Finished goods inventory, Dec. 31, 2017 40,000
Finished goods inventory, Jan 1, 2017 10,000
Heat, light & power – Plant 50,000
Indirect labor 50,000
Property taxes – Plant 50,000
Sales representatives’ salaries 160,000
Accounts receivable 400,000
Plant supervisor’s salary 65,000
Supplies – Administrative office 5,000
Supplies – Plant 25,000
Work-in-Process inventory, Dec 31, 2017 15,000
Work-in-Process inventory, Jan 1, 2017 25,000
Accounts payable 140,000
Property, plant, and equipment 800,000
a) Determine the total amount of cost of goods manufactured for 2017.
b) Compute the cost of goods sold for 2017.
c) What level of sales would have generated operating income of $300,000?
d) From the above list of accounts indicate one item that is an example of a(n):
i. indirect cost
ii. product cost
iii. period cost
iv. direct cost
Explanation / Answer
a)
3)Total OPerating expense =Depreciation expense – Administrative office 40000+ Sales representatives’ salaries 160000+ Supplies – Administrative office 5000
205000
Sales Desired =Cost of good sold +operating expense+ Profit
= 990000+205000+300000
= 1495000
d(i)Indirect cost : Heat, light & power – Plant
product cost -Property taxes – Plant
period cost - Sales representatives’ salaries
direct cost - Direct labor – Wages
Direct materials inventory, Jan 1, 2017 30000 Purchase 180000 Direct materials inventory, Dec. 31, 2017 (20000) Raw material used 190000 Direct labor – Wages 500000 Factory overhead Depreciation expense – Plant and equipment 80000 Heat, light & power – Plant 50000 Indirect labor 50000 Property taxes – Plant 50000 Plant supervisor’s salary 65000 Supplies – Plant 25000 Factory overhead 320000 Total manufactuirng cost 1010000 Work-in-Process inventory, Jan 1, 2017 25000 Work-in-Process inventory, Dec 31, 2017 (15000) cost of goods manufactured [Part A] 1020000 Beginning Finished goods inventory, Jan 1, 2017 10000 Finished goods inventory, Dec. 31, 2017 (40000) COst of goods sold [Part B] 990000Related Questions
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