PROBLEM 2-18 Schedule of Cost of Goods Manufactured; Income s L03, L04, L05, Los
ID: 340637 • Letter: P
Question
PROBLEM 2-18 Schedule of Cost of Goods Manufactured; Income s L03, L04, L05, Losi Various cost and sales data for Meriwell Company for the just c year sheet below: quired Prepare an answer she been done in two wa and secon it should Microsoft Excel fkEdt yew hert Fgrmet Tools Data wndow teb 100% E17 1Finished goods inventory, beginning $20,000 2 Finished goods inventory, ending$40,000 $110,000 $105.000 $125,000 $9,000 $6,000 $70,000 9 Work in process inventory, beginning $17,000 Factory la 3 Administrative expenses 4 Manufacturing overhead 5 Purchases of raw materials 6Raw matenals inventory, beginning 7 Raw materials inventory, ending 8 Direct labor To units 2. Total cost 10 Work in process inventory, ending 3. Ass $30.000 $500,000 $80,000 1 Sales 12 Seling expenses 13 are 4. Re Of the $105,000 of manufacturing overhead, $15,000 is variable 15,000 is variable and $90,000 is fixExplanation / Answer
1) The cost of goods manufactured are given below as per details given in the assignment
Meriwel Company
Schedule of cost of goods manufactured
Direct material :
Raw materials inventory , beginning
$9,000
Add : purchase of Raw materials
$125,000
Raw materials available for use
$134,000
Deduct : raw materials inventory , ending
$6,000
Raw materials used in production
$128,000
Direct Labor
$70,000
Manufacturing Overhead
$105,000
Total Manufacturing Costs
$303,000
Add : Work in process inventory , beginning
$17,000
$320,000
Deduct : work in process inventory , ending
$30,000
Cost of goods manufactured
$290,000
2 )
The income Statement is prepared below
Meriwel Company
Income statement
Sales
$500,000
Cost of goods sold
Finished goods inventory , beginning
$20,000
Add : cost of goods manufactured
$290,000
Goods available for sale
$310,000
Deduct : Finished goods inventory ,ending
$40,000
$270,000
Gross Margin
$230,000
Selling and administrative expenses
Selling expenses
$ 80,000
Administrative expenses
$110,000
$ 190,000
Net operating income
$40,000
3 )
Following information is taken for calculation of average cost per unit
· The number of units produced is 10,000
· The cost of direct material is $128,000 , which is cost of raw materials used in production
· The fixed manufacturing overhead is $90,000 given
Average cost per unit of direct material = cost of direct materials used in production / number of units produced
Average cost per unit of direct material = $128,000 / 10,000
Average cost per unit of direct material = $12.80
Average cost per unit of fixed manufacturing overhead = cost of fixed manufacturing overhead / number of units produced
Average cost per unit of fixed manufacturing overhead = $90,000 / 10,000
Average cost per unit of fixed manufacturing overhead =$9.00
4
Following information is taken for calculation of average cost per unit for coming year
· The number of units produced is 15,000
· The cost per unit of direct material is $12.80 , which is a variable cost and will remain same for each unit of production
Let us calculate total cost of direct material = per unit cost of direct material x total number of units produced
Total cost of direct material = $12.80 x 15,000
Total cost of direct material = $192,000
· The total fixed manufacturing overhead is $90,000 will remain constant at any level of production
Let us calculate the
Average cost per unit of fixed manufacturing overhead = cost of fixed manufacturing overhead / number of units produced
Average cost per unit of fixed manufacturing overhead = $90,000 / 15,000
Average cost per unit of fixed manufacturing overhead =$6.00
5
The per unit cost of direct material will remain same at $12.80 per unit but the per unit cost of Fixed manufacturing overhead get reduced to $6.0 per unit because any increase in units produced will spread over the fixed cost and per unit cost get reduced
Meriwel Company
Schedule of cost of goods manufactured
Direct material :
Raw materials inventory , beginning
$9,000
Add : purchase of Raw materials
$125,000
Raw materials available for use
$134,000
Deduct : raw materials inventory , ending
$6,000
Raw materials used in production
$128,000
Direct Labor
$70,000
Manufacturing Overhead
$105,000
Total Manufacturing Costs
$303,000
Add : Work in process inventory , beginning
$17,000
$320,000
Deduct : work in process inventory , ending
$30,000
Cost of goods manufactured
$290,000
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