Chapter 1 Assignment

Manufacturing cost data for Banta Company are presented below.

Option A Option B Option C

Direct materials used $ (a) $ 85,500 $ 78,050

Direct labor 47,000 46,000 (g)

Manufacturing overhead 46,500 45,500 47,750

Total manufacturing costs 175,575 (d) 178,375

Work in process 1/1/17 (b) 21,500 (h)

Total cost of work in process 197,075 (e) 199,875

Work in Process 12/31/17 (c) 35,231 35,751

Cost of goods manufactured 162,844 (f) (i)

(a) Indicate the missing amounts for each letter (a) through (i).

(b) Banta Company must choose between options A, B and C. Evaluate the three options and determine which one is in the best interest of Banta Company. Write a brief paragraph to explain your reasoning. The options differ as follows:

• Option A uses moderately priced materials from a supplier that usually has the quantities needed by Banta.
• Option B uses high quality materials that are readily available from a local supplier. Labor and manufacturing costs can be reduced slightly since fewer items fail quality tests during production.
• Option C uses slight significantly less expensive materials from a local supplier. These lower quality materials result in higher labor and manufacturing overhead costs.