Question

The following information is given for Sandy Company:

a.     cost of goods manufactured was $514,000

b.     there is no beginning or ending direct material inventory

c.     conversion costs totaled $360,000 and were equal to three times the prime costs

d.     applied overhead is equal to 340% of direct materials used

e.     beginning finished goods totaled $10,000

f.      beginning work in process is double the cost of ending work in process

Calculate Sandy Company's beginning work in process inventory balance

Answer 1

Conversion cost = 3*Prime cost
360000 = 3*Prime cost
Prime cost = 360000/3	120000
Applied overhead = 340%*Direct materials used
Prime cost = Direct materials used + Direct labor
120000 = Direct materials + Direct labor
Direct labor = 120000 - Direct materials
Conversion cost = Direct labor + Applied overhead
360000 = (120000-Direct materials) + (340%*Direct materials used)
360000 = 120000 - Direct materials + 3.4Direct materials
2.4Direct materials = 360000 - 120000
Direct materials = 240000 / 2.4	100000
Total manufacturing cost = Direct materials + Conversion cost = 100000 + 360000	460000
Beginning work in process = 2*Ending work in process
Cost of goods manufactured = Total manufacturing cost + Beginning work in process - Ending work in process
Cost of goods manufactured = Total manufacturing cost + (2*Ending work in process) - Ending work in process
Cost of goods manufactured = Total manufacturing cost + Ending work in process
514000 = 460000 + Ending work in process
Ending work in process = 514000 - 460000	54000
Beginning work in process = 2*Ending work in process = 2*54000	108000