Question

Natasha Co.'s Work in Process Inventory balance at the end of 2009 and 2010 was $200,000 and S150,000, respectively. During 2010, Natasha transferred $1,980,000 of completed products to finished goods. If $500,000 of direct labor and $300,000 overhead were added to Work in Progress Inventory during 2010, how many dollars of direct material was used in work in process? a. S850,000 b. S1,130,000 c. S1,180.000 d. $1,230,000 e. Cannot be determined from the information give

Answer 1

Answer: b. $1,130,000 Beginning work-in process inventory = $200,000 Ending work-in process inventory = $150,000 → at the beginning of the year 2010 = at the end of the year 2009 at the end of the year 2010 Total manufacturing cost = Direct material + Direct labor + Manufacturing overhead = Direct material + $500,000+ $300,000 = Direct material + $800,000 Cost of Goods Manufactured = $1,980,000 finished goods inventory Ending work-in process inventory = Beginning work-in process inventory + Total manufacturing cost - Cost of goods manufactured $150,000 = $200,000 + (Direct material + $800,000) – $1,980,000 Direct material = $150,000 - $200,000 - $800,000+ $1,980,000 = $1,130,000