Question

The information below has been taken from the cost records of Tercel Company for the past...

The information below has been taken from the cost records of Tercel Company for the past year:


Raw materials used in production (all direct) $326,000


Total manufacturing costs charged to jobs
during the year (includes raw materials, direct
labour, and manufacturing overhead applied
at the rate of 60% of direct labour cost) $686,000

Cost of goods available for sales $826,000

Selling and administrative expenses $25,000

Inventories
Beginning    Ending
Raw materials (all direct) $75,000 $85,000
Work in process 80,000 30,000
Finished goods 90,000 110,000


51) What was the cost of raw materials purchased during the year?
A) $411,000. B) $336,000. C) $360,000. D) $316,000.
52) What amount of direct labour cost was charged to production during the year? 52)
A) $225,000. B) $360,000. C) $216,000. D) $135,000.
53) What was the cost of goods manufactured during the year? 53)
A) $716,000. B) $636,000. C) $736,000. D) $766,000.
54) What was the cost of goods sold for the year (before disposition of any under- or
overapplied overhead)?
A) $691,000. B) $801,000. C) $716,000. D) $736,000.

Business   Accounting   
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Homework Answers

Answer #1

51) Ans: ( B) $ 336,000

Explanation:

RM Used = Beginning Bal. + Purchased - Ending Bal

$326,000 = $75000 + purchased - $85000

Purchased = $ 326,000 - $ 75,000 + $85000

Purchased = $ 336,000

52) Ans ( A) $ 225,000

Explanation:

Total Manufacturing Cost $686,000
Less: Raw mat. used'

($326,000)
Direct labor and Manufacturing Overhead $360,000

Since the manufacturing overhead is applied at the rate of 60% of the direct labor cost, the direct labor cost charged to production is $225,000 ($360,000 ÷ 160%)

53) Ans: ( C) $ 736,000

Explanation:

Cost of goods Manufactured:

= Total Manufacturing Cost + Begin WIP - Ending WIP

= $ 686,000 + $80,000 - $ 30,000

= $ 736,000

54) Ans ( C) $ 716,000

=Cost of goods manuf. + Begi. Finished goods - Ending Finished good

= $ 736,000 + $90,000 - $ 110,000

=$716,000

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