Chapter 1 Exercises

1. Sealy Company has beginning raw materials inventory $12,000, ending raw materials inventory $15,000, and raw
materials purchases $170,000. What is the cost of direct materials used?

Solution

Raw materials inventory, beginning ...................................................................... € 12,000

Raw materials purchases ...................................................................................... 170,000
Total raw materials available for use ..................................................................... 182,000
Raw materials inventory, ending ........................................................................... (15,000)
Direct materials used ................................................................................... €167,000

2. Tate Inc. has beginning work in process $26,000, direct materials used $240,000, direct labor $220,000, total
manufacturing overhead $180,000, and ending work in process $32,000. What are the total manufacturing costs?

Solution

Direct materials used ............................................................................................ $240,000

Direct labor used................................................................................................... 220,000
Total manufacturing overhead .............................................................................. 180,000
Total manufacturing costs ............................................................................ $640,000

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3. Presented below are incomplete manufacturing cost data.
a) Determine the missing amounts for three different situations.
Direct Materials Used Direct Labor Used Factory Overhead Total Manufacturing Costs

(1) $40,000 $61,000 $ 50,000 ?

(2) ? $75,000 $140,000 $296,000
(3) $55,000 ? $111,000 $310,000
b) Use the same data from above and the data below. Determine the missing amounts.
Total Work Work Cost of
Manufacturing in Process in Process Goods
Costs (1/1) (12/31) Manufactured
(1) ? $120,000 $82,000 ?
(2) $296,000 ? $98,000 $321,000
(3) $310,000 $463,000 ? $715,000

Solution
a) Total
Direct Direct Factory Manufacturing
Materials Used Labor Used Overhead Costs
(1) £151,000
(2) £81,000
(3) £144,000

b) Total Work in Work in

Manufacturing Process Process Cost of Goods
Costs (January 1) (December 31) Manufactured
(1) £151,000* £189,000
(2) £133,000
(3) £58,000

*£40,000 + £61,000 + £50,000 (data from a))

4. Francum Company has the following data: direct labor $209,000, direct materials used $180,000, total
manufacturing overhead $208,000, and beginning work in process $25,000. Compute (a) total manufacturing
costs and (b) total cost of work in process.

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Solution

(a) Direct materials used ...................................................................................................... $180,000

Direct labor ..................................................................................................................... 209,000
Total manufacturing overhead ....................................................................................... 208,000
Total manufacturing costs ................................................................................... $597,000
(b) Beginning work in process .............................................................................................. $ 25,000
Total manufacturing costs .............................................................................................. 597,000
Total cost of work in process ............................................................................... $622,000

5. The following information is available for Fishel Company.

April 1 April 30
Raw materials inventory $10,000 $14,000
Work in process inventory 5,000 3,500
Materials purchased in April $ 98,000
Direct labor in April 80,000
Manufacturing overhead in April 160,000
Prepare the cost of goods manufactured schedule for the month of April.

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Solution
FREY AG
Cost of Goods Manufactured Schedule
For the Month Ended April 30

Work in process, April 1..................................................... CHF 5,000

Direct materials ..................................................................
Raw materials, April 1 .................................................. CHF 10,000
Raw materials purchases ............................................. 98,000
Total raw materials available for use........................... 108,000
Less: Raw materials, April 30 ..................................... 14,000
Direct materials used ................................................... CHF 94,000
Direct labor ......................................................................... 80,000
Manufacturing overhead .................................................... 160,000
Total manufacturing costs ................................................ 334,000
Total cost of work in process ............................................ 339,000
Less: Work in process, April 30 ....................................... 3,500
Cost of goods manufactured............................................. CHF335,500

6. Lopez Corporation incurred the following costs while manufacturing its product.

Materials used in product $120,000 Advertising expense $45,000

Depreciation on plant 60,000 Property taxes on plant 14,000
Property taxes on store 7,500 Delivery expense 21,000
Labor costs of assembly-line Sales commissions 35,000
workers 110,000 Salaries paid to sales
Factory supplies used 23,000 clerks 50,000

Work in process inventory was $12,000 at January 1 and $15,500 at December 31. Finished goods inventory was
$60,000 at January 1 and $45,600 at December 31.
Instructions
(a) Compute cost of goods manufactured.
(b) Compute cost of goods sold.

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Solution

(a) Work-in-process, 1/1.................................................. $ 12,000

Direct materials used................................................. $120,000
Direct labor................................................................. 110,000
Manufacturing overhead
Depreciation on plant ....................................... $60,000
Factory supplies used ...................................... 23,000
Property taxes on plant .................................... 14,000
Total manufacturing overhead .................................. 97,000
Total manufacturing costs ........................................ 327,000
Total cost of work-in-process ................................... 339,000
Less: ending work-in-process .................................. 15,500
Cost of goods manufactured .................................... $323,500

(b) Finished goods, 1/1 ................................................... $ 60,000

Cost of goods manufactured ................................... 323,500
Cost of goods available for sale ............................... 383,500
Less: Finished goods, 12/31 .................................... 45,600
Cost of goods sold .................................................... $337,900

7. Manufacturing cost data for Copa Company are presented below.

Case A
Direct materials used $ (a)
Direct labor 57,000
Manufacturing overhead 46,500
Total manufacturing costs 195,650
Work in process 1/1/14 (b)
Total cost of work in process 221,500
Work in process 12/31/14 (c)
Cost of goods manufactured 185,275
Instructions
Indicate the missing amount for each letter (a) through (c).

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Solution
A + €57,000 + €46,500 = €195,650
A = €92,150
€195,650 + B = €221,500
B = €25,850
€221,500 – C = €185,275
C = €36,225

8. Incomplete manufacturing cost data for Colaw Company for 2020 are presented as follows for four different
situations.
Total Cost of
Direct Direct Manufac- Manufac- Work in Work in Goods
Materials Labor turing turing Process Process Manufac-
Used Used Overhead Costs 1/1 12/31 tured
(1) $117,000 $140,000 $ 87,000 $ (a) $33,000 $ (b) $360,000
(2) (c) 200,000 132,000 450,000 (d) 40,000 470,000
(3) 80,000 100,000 (e) 265,000 60,000 80,000 (f)
(4) 70,000 (g) 75,000 288,000 45,000 (h) 270,000

Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for situation (1) for the
year ended December 31, 2020.

Solution

(a) (a) HK$117,000 + HK$140,000 + HK$87,000 = HK$344,000

(b) HK$344,000 + HK$33,000 – HK$360,000 = HK$17,000
(c) HK$450,000 – (HK$200,000 + HK$132,000) = HK$118,000
(d) HK$40,000+ HK$470,000 – HK$450,000 = HK$60,000
(e) HK$265,000 – (HK$80,000 + HK$100,000) = HK$85,000
(f) HK$265,000 + HK$60,000 – HK$80,000 = HK$245,000
(g) HK$288,000 – (HK$70,000 + HK$75,000) = HK$143,000
(h) HK$288,000 + HK$40,000 – HK$270,000 = HK$63,000

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(b) ZHANG LTD.
Cost of Goods Manufactured Schedule
For the Year Ended December 31, 2020

Work in process, January 1 .................................................... HK$ 33,000

Direct materials ........................................................................ HK$117,000
Direct labor ............................................................................... 140,000
Manufacturing overhead ......................................................... 87,000
Total manufacturing costs............................................. 344,000
Total cost of work in process ................................................. 377,000
Less: Work in process inventory,
December 31 .............................................................. 17,000
Cost of goods manufactured .................................................. HK$360,000

9. Cepeda Corporation has the following cost records for June 2014.

Indirect factory labor $ 4,500 Factory utilities $ 400

Direct materials used 20,000 Depreciation, factory equipment 1,400
Work in process, 6/1/20 3,000 Direct labor 40,000
Work in process, 6/30/20 3,800 Maintenance, factory equipment 1,800
Finished goods, 6/1/20 5,000 Indirect materials 2,200
Finished goods, 6/30/20 7,500 Factory manager’s salary 3,000

Instructions
(a) Prepare a cost of goods manufactured schedule for June 2020.
(b) Prepare an income statement through gross profit for June 2020 assuming sales revenue
is $92,100.

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Solution
(a) CEPEDA CORPORATION
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2020

Work in process, June 1 ................................................ $ 3,000

Direct materials used..................................................... $20,000
Direct labor ..................................................................... 40,000
Manufacturing overhead
Indirect labor ........................................................ $4,500
Factory manager’s salary .................................... 3,000
Indirect materials ................................................. 2,200
Maintenance, factory equipment ......................... 1,800
Depreciation, factory equipment ......................... 1,400
Factory utilities..................................................... 400
Total manufacturing overhead .................... 13,300
Total manufacturing costs ............................................ 73,300
Total cost of work in process ....................................... 76,300
Less: Work in process, June 30................................... 3,800
Cost of goods manufactured ........................................ $72,500

(b) CEPEDA CORPORATION

Income Statement (Partial)
For the Month Ended June 30, 2020

Sales revenue................................................................................ $92,100

Cost of goods sold
Finished goods inventory, June 1...................................... $ 5,000
Cost of goods manufactured [from (a)]................................ 72,500
Cost of goods available for sale......................................... 77,500
Less: Finished goods inventory, June 30 ........................ 7,500
Cost of goods sold ......................................... 70,000
Gross profit ................................................................................... $22,100

10. The following information is available for Aikman Company.

January 1, 2020 2020 December 31, 2020
Raw materials inventory $21,000 $30,000
Work in process inventory 13,500 17,200
Finished goods inventory 27,000 21,000
Materials purchased $150,000
Direct labor 220,000
Manufacturing overhead 180,000
Sales revenue 910,000

Instructions
(a) Compute cost of goods manufactured.
(b) Prepare an income statement through gross profit.
(c) Show the presentation of the ending inventories on the December 31, 2020, balance sheet.

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Solution

(a) Work-in-process, 1/1................................................ Rs 13,500

Direct materials
Materials inventory, 1/1 .................................. Rs 21,000
Materials purchased ....................................... 150,000
Materials available for use ............................. 171,000
Less: Materials inventory, 12/31 .................... 30,000
Direct materials used............................................... Rs141,000
Direct labor............................................................... 220,000
Manufacturing overhead ......................................... 180,000
Total manufacturing costs ...................................... 541,000
Total cost of work-in-process ................................. 554,500
Less: Work-in-process, 12/31 ................................. 17,200
Cost of goods manufactured .................................. Rs 537,300

AIKMAN COMPANY
Income Statement (Partial)
For the Year Ended December 31, 2020

(b) Sales revenue.......................................................... Rs910,000

Cost of goods sold
Finished goods, 1/1 ........................................ Rs 27,000
Cost of goods manufactured ........................ 537,300
Cost of goods available for sale .................... 564,300
Less: Finished goods, 12/31 ......................... 21,000
Cost of goods sold ...................... 543,300
Gross profit ............................................................. Rs366,700

AIKMAN COMPANY
(Partial) Statement of Financial Position
December 31, 2020

(c) Current assets

Inventories
Finished goods ................................................................... Rs21,000
Work in process ................................................................. 17,200
Raw materials ..................................................................... 30,000 Rs68,200