can I please get some help with this? Brown-Accountants Company creates, produce

Question

can I please get some help with this?

Brown-Accountants Company creates, produces, and sells CD-ROM based CPA review courses for individual use. Zoe Banks, head of human resources, is convinced that question development employees must have strong analytical and problem-solving skills. She asked Christopher Williams, controller for Brown-Accountants Company, to help develop problems for use in screening applicants before they are interviewed. problems Christopher developed is based on the following data for a mythical company for the previous year A. Conversion cost was $240,000 and was three times the prime costs. B. Direct materials used in production equaled $45,000 C. Cost of goods manufactured was $295,000. D. Ending work in process is 20 percent of the cost of beginning work in process. E. There are ending is 2 times beginning for direct materials. F. Cost of goods sold was 80 percent of cost of goods manufactured. G. Beginning finished goods inventory was $14,400. H. Supervision and indirect labor is 4 times material handling costs. I. Supplies are $37,000, which is 40 percent of the costs of utilities. J. Freight-in on materials is $1000. Statement of Cost of Goods Manufactured For the Year Ended December 31 Direct materials Direct materials beginning inventory Add: Purchases Freight-in on materials Materials available Less: Direct materials ending inventory Direct materials used Direct labor cost Overhead: Material handling Supplies Utilities Supervision and indirect labor Total overhead cost Total current manufacturing costs added Add: Beginning work in process Total manufacturing costs to account for Less: Ending work in process Cost of goods manufactured Statement of Cost of Goods Sold For the Year Ended December 31 Cost of goods manufactured Add: Beginning finished goods inventory Cost of goods available for sale Less: Ending finished goods inventory Cost of goods sold Page 9 of 9

Explanation / Answer

Working Notes :-

1) Conversion cost = $240000

prime cost is 1/3 of conversion cost = $240000/3 = $80000

2)Prime cost = Direct Material cost + Direct Labour cost + Direct expense cost

3) Total conversion cost = $240000

Conversion cost = Direct labour cost + direct expense cost + Overhead costs

4) Assume Material handling cost = 'x'

Supervision and Indirect Labour = '4x'

Equation = x + 37000 + 92500 + 4x = 205000

5x = 75500

x = 15100 (Material Handling cost)

4x = 15100*4 = $60400 (Supervision and indirect labour)

5) Work in process

Total current Manufacturing cost added = direct material cost + Direct Labour cost + overhead cost +direct expense cost

= $45000 + $35000 + $205000 = $285000

Assume Beginning work in process = 'x'

Ending work in process = '0.2x'

Equation = 285000 + x - 0.2x = 295000

0.8x = 10000

x = 12500 (Beginning work in process)

0.2x = 2500 (Ending work in process)

6) Ending finish goods Inventory

7) Direct Material

Assume = Beginning Raw material = 'x'

Ending Raw Material = '2x'

Assume = Raw Material purchase cost = $45000 (which is equal to consumption cost)

Equation = x + 45000 + 1000 - 2x = 45000

-x = -1000

x = 1000 (Beginning Raw Material)

2x = 2000 (Closing Raw Material)

Statement of cost of goods manufactured and sold

Particulars Amount Prime cost $80000 Less : Material use cost $45000 Labour cost $35000

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