The following are data regarding last years production of Old Joe, one of the major products of
Question:
Purchases of direct materials . . . . . . . . . . . . . . . . . . . . $400,000
Direct materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . 402,000
Direct labor payrolls (paid during the year) . . . . . . . 180,000
Direct labor costs assigned to production . . . . . . ... 220,000
Manufacturing overhead (incurred and applied). . . . . . 330,000
During the year, 50,000 units of this product were manufactured and 51,500 units were sold. Selected information concerning inventories during the year follows:
Instructions
a. Prepare a schedule of the cost of finished goods manufactured for the Old Joe product.
b. Compute the average cost of Old Joe per finished unit.
c. Compute the cost of goods sold associated with the sale of Old Joe. Assume that there is a first-in, first-out (FIFO) flow through the Finished Goods Inventory account and that all units completed are assigned the per-unit costs determined in part b.
d. Compute the amount of inventory relating to Old Joe that will be listed in the companys balance sheet at December 31. Show supporting computations for the year end amounts of materials inventory and finished goods inventory.
e. Explain how the $220,000 in direct labor costs assigned to production affect the companys income statement and balancesheet.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello