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Cost Assignment Methods

Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water are mixed together and then bottled in $10-$gallon drums. Brody provided the following information for last year:

Raw materials purchases $$250,000$

Direct labor $140,000$

Depreciation on factory equipment $45,000$

Depreciation on factory building $30,000$

Depreciation on headquarters building $45,000$

Factory insurance $15,000$

Property taxes:

Factory $20,000$

Headquarters $18,000$

Utilities for factory $34,000$

Utilities for sales office $2,400$

Administrative salaries $150,000$

Indirect labor salaries $159,000$

Sales office salaries $90,000$

Beginning balance, raw materials $127,000$

Beginning balance, work in process $124,000$

Beginning balance, finished goods $84,000$

Ending balance, raw materials $102,000$

Ending balance, work in process $130,000$

Ending balance, finished goods $85,000$

Last year, Brody completed $100,000$ units. Sales revenue equaled $$1,200,000,$ and Brody paid a sales commission of $5$ percent of sales.

Required:

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$1.$ Calculate the direct materials used in production for last year.

$fill in the blank b$93$e$9606$ffc$1$f$9$e$\_1$

$275,000$

$2.$ Calculate total prime cost.

$fill in the blank b$93$e$9606$ffc$1$f$9$e$\_2$

$415,000$

$3.$ Calculate total conversion cost.

$fill in the blank b$93$e$9606$ffc$1$f$9$e$\_3$

$443,000$

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$1.$ See Cornerstone $2\mathrm{.}2$

$2.$ See Cornerstone $2\mathrm{.}1$

$3.$ See Cornerstone $2\mathrm{.}1$

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$4.$ Prepare a cost of goods manufactured statement for last year.

Brody Company

Statement of Cost of Goods Manufactured

For Last Year

Direct materials

$Direct materials

$275,000$

Direct labor

Direct labor

$140,000$

Overhead

Overhead

$303,000$

Total manufacturing cost $fill in the blank $6858$e$7$fd$701$ff$9$a$\_7$

$718,000$

Add: Beginning work in process

Add: Beginning work in process

$124,000$

Less: Ending work in process

Less: Ending work in process

$130,000$

Cost of goods manufactured

$Cost of goods manufactured

$712,000$

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See Cornerstone $2\mathrm{.}2$

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Calculate the unit product cost. If required, round your answer to the nearest cent.

$fill in the blank ea$4$d$9$a$01207$a$07$d$\_1$

$7\mathrm{.}12$

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See Cornerstone $2\mathrm{.}1$

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$5.$ Prepare a cost of goods sold statement for last year.

Brody Company

Statement of Cost of Goods Sold

For Last Year

Cost of goods manufactured

$Cost of goods manufactured

$712,000$

Add: Beginning inventory, Finished goods

Add: Beginning inventory, Finished goods

$84,000$

Less: Ending inventory, Finished goods

Less: Ending inventory, Finished goods

$85,000$

Cost of goods sold

$Cost of goods sold

$711,000$

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See Cornerstone $2\mathrm{.}3$

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$6.$ Prepare an income statement for last year. Show the percentage of sales that each line item represents. When required, round the percent to four decimal places before converting to a percentage. For example, $\mathrm{.}88349$ would be rounded to $\mathrm{.}8835$ and entered as $88\mathrm{.}35.$

Brody Company

Income Statement

For Last Year

Percent

Sales

$Sales

$1,200,000$

Sales

$100$

$\%$

Cost of goods sold

Cost of goods sold

$711,000$

Cost of goods sold

$59\mathrm{.}25$

$\%$

Gross margin

$Gross margin

$489,000$

Gross margin

$40\mathrm{.}75$

$\%$

Less: Operating expenses

Selling expenses

Selling expenses

$300,000$

Selling expenses

$25$

$\%$

Administrative expenses

Administrative expenses

$65,400$

Administrative expenses

$5\mathrm{.}45$

$\%$

Operating income

$Operating income

$123,600$

Operating income

$10\mathrm{.}3$

$\%$