Question

Hammer Inc., had the following activities during 2012: Direct materials: Beginning inventory $ 20,000 Purchases 61,600 Ending inventory 10,400 Direct manufacturing labor 16,000 Manufacturing overhead 12,000 Beginning work-in-process inventory 800 Ending work-in-process inventory 4,000 Beginning finished goods inventory 24,000 Ending finished goods inventory 16,000 Required: a. What is the cost of direct materials used during 2012? b. What is cost of goods manufactured for 2012? c. What is cost of goods sold for 2012? d. What amount of prime costs was added to production during 2012? e. What amount of conversion costs was added to production during 2012?

Answer 1

a
Raw materials inventory, beginning	20000
Add: Purchases of raw materials	61600
Total raw materials available	81600
Deduct: Raw materials inventory, ending	10400
Cost of direct materials used	71200
b
Cost of direct materials used	71200
Direct labor	16000
Manufacturing overhead	12000
Total manufacturing costs	99200
Add: Beginning work in process inventory	800
	100000
Deduct: Ending work in process inventory	4000
Cost of goods manufactured	96000
c
Finished goods inventory, beginning	24000
Add: Cost of goods manufactured	96000
Cost of goods available for sale	120000
Deduct: Finished goods inventory, ending	16000
Cost of goods sold	104000
d
Cost of direct materials used	71200
Direct labor	16000
Prime costs	87200
e
Direct labor	16000
Manufacturing overhead	12000
Conversion costs	28000