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PROBLEM 16.5A
ANDITON MANUFACTURING (concluded)
b.
Work in process inventory, beginning of year 75,000$
Add: Manufacturing costs assigned to production:
Direct materials used [part a (2) ]2,506,000$
ANDITON MANUFACTURING CORP.
Schedule of the Cost of Finished Goods Manufactured
For the Year Ended December 31
35 Minutes, Strong
PROBLEM 16.6A
KITCHEN GADGET CO.
a.
Work in process inventory, Jan. 1 3,000$
Add: Manufacturing costs assigned to production:
Direct materials used 333,600$
b. Unit cost of goods finished:
Cost of finished goods manufactured (part a)799,900$
Units manufactured 61,000
Unit cost ($799,900 ÷ 61,000 units) 13.1131$
c. Cost of goods sold (62,100 units, FIFO basis):
3,000 units from finished goods inventory at Jan. 1 39,000$
Add: 59,100 units manufactured (@ $13.1131 per unit) * 774,985
Cost of goods sold 813,985$
d. Inventory at December 31:
Materials:
Inventory at Jan. 1 12,800$
Add: Purchases of direct materials 332,000
KITCHEN GADGET CO.
Schedule of the Cost of Finished Goods Manufactured—Dicer Ricer
December 31
PROBLEM 16.6A
KITCHEN GADGET CO. (concluded)
e.
Direct labor is a product cost, and therefore, it becomes “attached” to the products
manufactured. To the extent that units manufactured were sold in the same year, the
25 Minutes, Medium
PROBLEM 16.7A
IDAHO PAPER COMPANY
a.
Work in process inventory, January 1 40,000$
(1)
Cost of direct materials used:
Materials inventory, January 1 25,000$
Add: Purchases of direct materials 330,000
b. Average unit costs:
Cost of finished goods manufactured (part a)1,350,000$
Units manufactured 45,000
Average unit cost ($1,350,000 ÷ 45,000 units) 30$
c. Cost of goods sold (FIFO basis):
IDAHO PAPER CO.
Schedule of the Cost of Finished Goods Manufactured
For the Year Ended December 31
40 Minutes, Strong
PROBLEM 16.8A
RAYMOND ENGINEERING CO.
a.
Manufacturing costs assigned to production:
Direct materials used (1) 135,000$
Direct labor 110,000
(1)
Computation of cost of direct materials used:
Purchases of direct materials 181,000$
Less: Materials inventory, end of year 46,000$
Direct materials used 135,000$
c.
Net sales 610,600$
Cost of goods sold:
Cost of finished goods manufactured (part a)383,500$
Less: Ending inventory of finished goods 88,500
RAYMOND ENGINEERING CO.
Income Statement
For the Year Ended December 31
RAYMOND ENGINEERING CO.
Schedule of the Cost of Finished Goods Manufactured
For the Year Ended December 31
PROBLEM 16.8A
RAYMOND ENGINEERING CO. (concluded)
d.
(53,000)$
166,000
Evaluation of Raymond’s conclusions:
Raymond is in error about the $66.36 unit cost of production and the overall
unprofitability of the business. In concluding that the business sustained a net loss,
Net loss calculated by Raymond
Raymond has made three errors in computing the cost of production. First, he included
selling and administrative expenses in his calculations. These costs do not relate to the
manufacturing process and, therefore, are not part of the cost to manufacture the valves.
Add: Product costs erroneously deducted as expense
SOLUTIONS TO PROBLEMS SET B
20 Minutes, Easy
PROBLEM 16.1B
PINNING, INC.
a. Computations of amounts:
(1) Average per-unit manufacturing cost:
Cost of finished goods manufactured 880,000$
Number of completed units manufactured 110
Average cost per unit ($880,000 ÷ 110 units) 8,000$
Ending finished goods inventory:
Average per-unit manufacturing cost [part (1) ]8,000$
Number of finished goods in inventory
(110 manufactured, less 90 sold) 20
Ending inventory of finished goods
(20 units × $8,000 per unit) 160,000$
(3) Cost of goods sold:
PROBLEM 16.1B
PINNING, INC. (concluded)
b.
1,180,000$
The disposition of the $1,180,000 in manufacturing costs “incurred” during the year is
summarized below:
Comments on deducting manufacturing costs from revenue:
No—the entire $1,180,000 in manufacturing costs is not deducted from the revenue of the
Total manufacturing costs “incurred” during the year
15 Minutes, Easy
PROBLEM 16.2B
RIVER QUEEN CORPORATION
a. Total manufacturing costs assigned to work in process:
Direct materials used 800,000$
Direct labor applied to production 1,000,000
Manufacturing overhead 2,000,000
Total manufacturing costs assigned to work in process 3,800,000$
b. Cost of finished goods manufactured:
d. Gross profit on sales:
Sales ($130,000 average sales price × 30 units sold) 3,900,000$
Less: Cost of goods sold (c)2,400,000
Gross profit on sales 1,500,000$
20 Minutes, Easy
PROBLEM 16.3B
ISP, INC.
a. Purchases of direct materials 260,000$
b. Cost of direct materials used:
e. Overhead rate:
Overhead assigned during the year 210,000$
Direct labor costs assigned to production 140,000$
Overhead rate, stated as a percentage of direct labor cost
($210,000 ÷ $140,000) 150%
f. Total Manufacturing costs:
Direct materials used (part b)255,000$
i. Cost of goods sold:
Beginning inventory of finished goods 45,000$
Add: Cost of finished goods manufactured 608,000
Cost of goods available for sale 653,000$
Less: Ending inventory of finished goods 50,000
Cost of goods sold 603,000$
PROBLEM 16.3B
ISP, INC. (concluded)
j. Total inventory at year-end:
20 Minutes, Easy
PROBLEM 16.4B
PAYBACK CORPORATION
a. Purchases of direct materials 360,000$
b. Cost of direct materials used:
Materials inventory, beginning of year 18,000$
c. Direct labor payrolls paid during the year 225,000$
d. Direct labor costs assigned to production 230,000$
e. Overhead costs during the year 400,000$
h. Cost of goods sold:
Beginning inventory of finished goods 98,000$
Add: Cost of finished goods manufactured (part g)989,000
Cost of goods available for sale 1,087,000$
Less: Ending inventory of finished goods 110,000
Cost of goods sold 977,000$
i. Total inventory at year-end:
35 Minutes, Medium
PROBLEM 16.5B
VALLEYVIEW MANUFACTURING
a. (1) Direct materials purchased 225,000$
(2) Direct materials used:
Materials inventory, beginning of year 25,000$
Add: Purchases of direct materials 225,000
(5) Overhead:
Overhead assigned to production 420,000$
Direct labor cost assigned to production 210,000
Overhead stated as a percentage of direct labor cost ($420,000 ÷ $210,000) 200%
($420,000 ÷ $210,000)
(6) Total manufacturing costs:
Direct materials used [part a (2) ]235,000$
(8) Cost of goods sold:
Beginning inventory of finished goods 30,000$
Add: Cost of finished goods manufactured [part a (7)] 863,000
Cost goods available for sale 893,000$
Less: Ending inventory of finished goods 24,000
Cost of goods sold 869,000$
