Question

Presented below is selected information from the Larry Company's current period account records (in $000s):

Raw Materials Used: 2,500

Direct Labor Costs: 1,000

Period Costs (S&A): 2,500

Beginning Raw Materials Inventory: 300

Ending Raw Materials Inventory: 1,000

Net Income: 300

Beginning Work-in-Process Inventory: 0

Ending Work-in-Process Inventory: 300

Beginning Finished Goods Inventory: 700

Ending Finished Goods Inventory: 400

Note: All raw materials used were direct materials

Determine the following (in dollars)

a) Raw Materials Purchases

b) Gross Profit if Sales were $12,000

c) Cost of Goods Manufactured

d) Manufacturing Overhead Applied

Answer 1

a)

Beg raw material + raw material purchases - raw materials used = End raw materials

300+raw material purchases - 2500 = 1000

Raw Material purchases = 3,200

b)

Gross Profit - Period Costs = Net Income

Gross Profit - 2500 = 300

Gross Profit = 2,800

c)

Sales - COGS = Gross Profit

COGS = Beg. Finished goods + Cost of Good Manufactured - Ending Finished Goods

Sales - Beg. Finished goods - Costs of good manufactured + end finished goods = Gross profit

12000-700+400+cost=2800

11700-Cost of goods manufactured = 2800

Cost of goods manufactured = 8,900

d)

Beg. Work-in-Process + Direct Raw Mat. Used + Direct Labor + Mfg. Overhead– Cost of Goods Mfg = ending work in progress

0+2500+1000+Mfg. overhead-8900=300

.Manufacturing overhead = 5,700