Question

Basil Industries reported the following information for December:

Please show work

Beginning balance, Raw Materials Inventory	$187,500
Beginning balance, Work in process Inventory	300,000
Beginning balance, Finished Goods Inventory	106,250
Purchases of raw materials	337,500
Factory electricity	62,500
Direct labor payroll	200,000
Depreciation on factory equipment	218,750
Insurance on factory building	50,000
Indirect materials used in production	43,750
Total raw materials used in production	406,250
Indirect labor payroll	150,000
Cost of goods manufactured	1,250,000
Cost of goods sold	1,312,500

Required: Using the information provided above, calculate the following items below.
Note: total raw materials used in production includes both direct and indirect materials. Assume actual manufacturing overhead = applied overhead.

3a: What was the balance in ending raw materials at December 31?

3b: What was the total manufacturing cost for December?

3c: What was the cost of the direct materials used by Basil in production?

3d: What was the ending balance in Basil’s Finished Goods Inventory account?

Answer 1

3a.

Beginning balance, Raw materials inventory	$187,500
Add : purchases of raw materials	337,500
Less : Total raw materials used in production	(406,250)
Ending balance, Raw materials inventory	$118,750

3b.

Direct materials used ($406,250 - $43,750)		$362,500
Direct labor		200,000
Factory overhead :
Indirect materials used in production	$43,750
Indirect labor	150,000
Factory electricity	62,500
Depreciation on factory equipment	218,750
Insurance on factory building	50,000
Total Factory overhead		525,000
Total manufacturing costs		$1,087,500

3c. Direct materials used in production = Total raw materials used in production - Indirect materials used in production

= $406,250 - $43,750 = $362,500

3d.

Beginning balance, Finished goods inventory	$106,250
Add : Cost of goods manufactured	1,250,000
Less : Cost of goods sold	(1,312,500)
Ending balance, Finished goods inventory	$43,750