Question

The following data has been provided by the Howard Simon Corporation concerning last year’s operations:

            Direct materials                                                                       18,000

            Direct labor                                                                             58,000

            Manufacturing overhead applied to Work in Process            75,000

            Overapplied overhead                                                             6,000

                                                                        Beginning       Ending

            Raw Materials Inventory                    13,000             19,000

            Work in Process Inventory                 64,000             74,000

            Finished Goods Inventory                  32,000             40,000

10. If Howard Simon purchased $30,000 of raw materials during the year, how much raw materials were used in production?

11. How much is Howard Simon’s Cost of Goods Manufactured?

12. Assuming that Howard Simon closes out overapplied overhead to Cost of Goods Sold, what was its Adjusted Cost of Goods Sold for the year?

Answer 1

10.

Raw materials used in production = Beginning raw materials inventory + Raw materials purchased - Ending raw materials inventory

= $13,000 + $30,000 - $19,000

= $24,000

11.

Beginning work in process inventory	$64,000
Direct materials used ($13,000+$18,000-$19,000)	$12,000
Direct labour	$58,000
Overhead applied	$75,000
Work in process available	$209,000
Less : Ending work in process	$74,000
Cost of goods manufactured	$135,000

12.

Beginning finished goods inventory	$32,000
Cost of goods manufactured	$135,000
Finished goods available	$167,000
Less : Ending finished goods inventory	$40,000
Less : Overapplied overhead	$6,000
Cost of goods sold	$121,000