Problem 3, (15 Points) Haggan Manufactur ing Inc. provided the following Informa

Question

Problem 3, (15 Points) Haggan Manufactur ing Inc. provided the following Information for the year 'urchases-Direct Materials t Utilities and ndirect Materials ndirect Labor ing Balance Work-in-Process ventory nding Balance Direct Materials rect Labor tion on Factory Plant and 18,000 quipment inning Balance-Work-in-Process nventory inning Balance Direct Materials Required: Determine the following a. What is the Direct material transferred? b. What is the Cost of Goods Manufactured? What is the Cost of Goods Sold? c. 2-70 PUrcnases

Explanation / Answer

a.] Direct material transferred = beginning direct material + purchase - ending direct material

= 63000 + 270000 - 45000

= $288000

cost of goods manufactured = Beginning work in process +Direct material transferred + direct labor + manufacturing overhead - ending work in process

=18000 + 288000 + 352500 + 270000 - 42000

= $886500

Note:-manufacturing overhead = indirect labor + indirect material + plant utilities and insurance + Depreciation on factory plant

cost of goods sold = Beginning finished goods inventory + cost of goods manufactured -   Ending finished goods inventory

= 0 + 886500 - 0

= $886500

b.]    Cash flow statement

Cash flow from operating activities

net income 443000

add:depreciation 36000

loss on sale 6000

   485000

increase in accounts receivable (34800)

increase in inventories (14000)

decrease in accounts payable (22000)

decrease in unearned revenue (10000)

decrease in accrued salaries (3600)

increase in tax payable 7200   

Net cash used by operating activities 407800

Cash flow from financing activities

dividend paid (406600)

proceed from common stock 124000

payment for long term notes   (36000)

Net Cash used by financing activities (318600)

Cash flow from investing activities

purchase of equipment (124000)

sale of equiment 38000

net Cash used by investing activities (86000)

Net increase in cash 3200

add: cash at beginning    86000

Cash at end 89200

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