Renewable Energy Manufacturing Ltd is a leading manufacturer of solar panels. The following data are taken...

 

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Renewable Energy Manufacturing Ltd is a leading manufacturer of solar panels. The following data are taken from its accounting records for the financial year ending 31 December 2022: $ Sales Purchases of raw material Direct labour cost incurred Other selling and administrative expenses Indirect labour cost (60% for factory; 40% for selling & admin) Other manufacturing expenses 4,425,000 1,500,000 1,050,000 180,000 600,000 225,000 Depreciation of building (75% for factory; 25% for selling & admin) 300,000 Depreciation of equipment (85% for factory; 15% for selling & admin) 240,000 Income tax expense 60,000 Indirect material used (all for factory) 45,000 Insurance on factory & equipment (90% for factory; 10% for selling & admin) 75,000 Electricity (80% for factory; 20% for selling & admin) 150,000 Raw material inventory, 1 January 2022 120,000 Raw material inventory, 31 December 2022 90,000 Work in process, 1 January 2022 Work in process, 31 December 2022 30,000 45,000 Finished goods inventory, 1 January 2022 Finished goods inventory, 31 December 2022 75,000 105,000 The company uses normal costing and manufacturing overhead is applied at the rate of 125% of direct labour cost. Required: (a) Compute the manufacturing costs incurred for the current year. (4 marks) (b) Compute the cost of goods manufactured (COGM) for the current year. (2 marks) (c) Compute the manufacturing overhead variance. (7 marks) (d) Compute the cost of goods sold (COGS) if the company closes overapplied or underapplied overhead cost into the cost of goods sold. (3 marks) (e) Prepare Renewable Energy Manufacturing Ltd's Income statement for the year. (9 marks) Renewable Energy Manufacturing Ltd is a leading manufacturer of solar panels. The following data are taken from its accounting records for the financial year ending 31 December 2022: $ Sales Purchases of raw material Direct labour cost incurred Other selling and administrative expenses Indirect labour cost (60% for factory; 40% for selling & admin) Other manufacturing expenses 4,425,000 1,500,000 1,050,000 180,000 600,000 225,000 Depreciation of building (75% for factory; 25% for selling & admin) 300,000 Depreciation of equipment (85% for factory; 15% for selling & admin) 240,000 Income tax expense 60,000 Indirect material used (all for factory) 45,000 Insurance on factory & equipment (90% for factory; 10% for selling & admin) 75,000 Electricity (80% for factory; 20% for selling & admin) 150,000 Raw material inventory, 1 January 2022 120,000 Raw material inventory, 31 December 2022 90,000 Work in process, 1 January 2022 Work in process, 31 December 2022 30,000 45,000 Finished goods inventory, 1 January 2022 Finished goods inventory, 31 December 2022 75,000 105,000 The company uses normal costing and manufacturing overhead is applied at the rate of 125% of direct labour cost. Required: (a) Compute the manufacturing costs incurred for the current year. (4 marks) (b) Compute the cost of goods manufactured (COGM) for the current year. (2 marks) (c) Compute the manufacturing overhead variance. (7 marks) (d) Compute the cost of goods sold (COGS) if the company closes overapplied or underapplied overhead cost into the cost of goods sold. (3 marks) (e) Prepare Renewable Energy Manufacturing Ltd's Income statement for the year. (9 marks)

Answer rating: 100% (QA)

a To compute the manufacturing costs incurred for the current year we need to calculate the total manufacturing costs The manufacturing costs include direct materials direct labor and manufacturing ov... View the full answer