Refer to the schedule of cost of goods manufactured prepared in problem 2.39.
Problem 2.39 data

Required:
1. How much of the manufacturing costs incurred during the current year remain in work in process inventory on 31 December?
2. Suppose Maximus manufacturing had increased its production in the current year by 20 per cent. What effect would this change have on the direct material cost shown in the schedule of cost of goods manufactured? Why?
3. Answer the same question as in requirement 2 for depreciation on the factory building.
4. Suppose that only half of the $72,000 in depreciation on equipment was related to factory machinery, and the other half was related to selling and administrative equipment. How would this have changed the schedule of cost of goods manufactured?

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$2 526 000 Sales revenue 106 800 Raw material inventory, 1 January 877 200 Purchases of raw material 70 800 Raw material inventory, 31 December 568 800 Direct labour cost incurred 322 800 Selling and administrative expenses 180 000 Indirect labour cost incurred 108 000 Council rates 150 000 Depreciation on factory building 30 000 Income tax expense 54 000 Indirect material used 72 000 Depreciation on factory equipment Insurance on factory and equipment 48 000 Electricity for factory 84 000 Work in process inventory, 1 January Work in process inventory, 31 December 48 000 Finished goods inventory, 1 January 42 000 Finished goods inventory, 31 December 48 000