Question

Fire Furnace Manufacturing Company Provided the following information for the yearn 2019:

Inventories	31/12/2018	31/12/2019
Direct Materials	$84000	$60000
Work-in-Process	26000	54000
Finished Goods	94000	89000

Other Information:

Sales Revenue	1998000
Raw Materials Purchased	360000
Direct Labour	470000
Indirect Materials	60000
Plant Supervisor's Salary	49000
Office Cleaner's Wages	8000
Depreciation on factory plant & equipment	89000
Plant Utilities	130000
Special Design Cost	25700
Insurance *	120000
Office Utilities	42100
Depreciation on delivery truck	18000
Administrative Salaries	78000
Salesmen Commission	26000
Advertising	10200

* of the total insurance,75% relates to Manufacturing & 25%relates to general & administrative costs.

Requirements:

(A) what was the amount of direct material used in production?

(B)What was the amount of Factory Overhead Costs?

(C) What is the prime cost and conversion cost of the product ?

(D)Prepare a schedule of cost of goods manufactured for the year ended December 31,2019,clearly showing total manufacturing costs & total manufacturing costs to account for.

(E) Prepare an income statement for Fire Furnace Manufacturing for the year ended December 31.2019,clearly showing cost of goods sold.

(F)During the year,Fire Furnace Manufacturing Company produced 2550units of Product.What was the unit Product cost?

Answer 1

Aus A AUSB Statement viowing Calculatiou of Direct Material Used in Production Pauriculars. 84000 Opening direct Material Add: - Purchases 360,000 Less :- Closing direct Material ( 860000) Direct Mateulae consumed 3, 84,000 Statement showing Calculation of Factory Querhead lost, Factory duerneads unclude 60,000 - Indirect Material Pont Siншioчa Salaxy 49000 Depreciation on factouy plant. 89000 Plant Utilities 130 000 Insurance. (75%) 90 000 Special Design cost. 25 700 Total Factory oumnead. 443700 Prime Cost = Direct labour + Direct Material 384,000 + 360,000 = $744,000 Conversion cost of product = Prime cost + Factory Quennead t op. Wild - Closing WJP + Op. FG- Closung FG = 7440od +443700 + 26,000 +94000 -890oo-54000 = $1204,700 Ausc.