Form a schedule of cost of goods manufactured

Question

Assignment:

Place calculations and answers on an Excel spreadsheet or Word document.  Show all of your work.  

Question 1. The following data (in thousands of dollars) have been taken from the accounting records of Larkin Corporation for the just completed year

Sales ....................................................................................................	$860
Purchases of raw materials ..................................................................	$170
Direct labor ..........................................................................................	$220
Manufacturing overhead .....................................................................	$210
Administrative expenses .....................................................................	$120
Selling expenses ..................................................................................	$170
Raw materials inventory, beginning ....................................................	$10
Raw materials inventory, ending .........................................................	$50
Work in process inventory, beginning .................................................	$80
Work in process inventory, ending ......................................................	$60
Finished goods inventory, beginning ..................................................	$110
Finished goods inventory, ending .......................................................	$100

a. Prepare a Schedule of Cost of Goods Manufactured in good form.
       
b. Compute the Cost of Goods Sold.
       
c. Using data from your answers above as needed, prepare an Income Statement in good form.

Question 2. A3 Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:

Raw materials .......................................................................	$39,000
Work in process ....................................................................	49,000
Finished goods ......................................................................	10,000

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 22,000 machine-hours and incur $264,000 in manufacturing overhead cost. The following transactions were recorded for the year:
                   
a) Raw materials were purchased, $301,000.

b) Raw materials were requisitioned for use in production, $292,000 ($273,000 direct and $19,000 indirect).

c) The following employee costs were incurred: direct labor, $296,000; indirect labor, $81,000; and administrative salaries, $181,000.

d) Selling costs, $130,000.

e) Factory utility costs, $18,000.

f) Depreciation for the year was $162,000 of which $155,000 is related to factory operations and $7,000 is related to selling and administrative activities.

g) Manufacturing overhead was applied to jobs. The actual level of activity for the year was 21,000 machine-hours.

h) The cost of goods manufactured for the year was $839,000.

i) Sales for the year totaled $1,200,000 and the costs on the job cost sheets of the goods that were sold totaled $824,000.

j) The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.

Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

Question 3. Anders Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month

Work in process, beginning:
Units in process ............................................................................................................	800
Stage of completion with respect to materials .......................................................	70%
Stage of completion with respect to conversion ....................................................	10%
Costs in the beginning inventory:
Materials cost ..........................................................................................................	$1,736
Conversion cost ......................................................................................................	$2,288
Units started into production during the month ........................................................	18,000
Units completed and transferred out ...........................................................................	18,400
Costs added to production during the month:
Materials cost ..............................................................................................................	$59,908
Conversion cost ...........................................................................................................	$520,696
Work in process, ending:
Units in process ............................................................................................................	400
Stage of completion with respect to materials .......................................................	70%
Stage of completion with respect to conversion ....................................................	20%

Prepare a production report for the department using the weighted-average method (Please ensure that you include all parts of the production report).

Question 4. Sandra Freestone has developed a new product that she has decided to produce and market. To proceed with this project, Sandra will quit her present job, which pays $3,000 a month. Sandra has found a small building to rent for $500 a month that will house the production facilities. One major piece of equipment that will be used to manufacture the product will be rented for $100 a month. Sandra purchased all of the other needed tools five years ago for $1,500. Material costs to make the product are estimated at $3 per unit. Monthly advertising costs for the product are estimated at $600.

Question 5. Complete the chart below by placing an "X" under each heading that helps to identify the cost involved. There can be "X"s placed under more than one heading for a single cost; e.g., a cost might be a sunk cost, an overhead cost, and a product cost. There would be an "X" placed under each of these headings opposite the cost.

	Oppor-tunity Cost	Sunk Cost	Vari-able Cost	Fixed Cost	Prime Cost	Conver-sion Cost	Manu-facturing Overhead	Period Cost	Differ-ential Cost *
Building rent
Original cost of tools
Equipment rented
Material cost
Present salary
Advertising

Between the alternatives of producing and not producing the product.