Question

Q1. The following cost and inventory data were taken from the accounts of SIMON COMPANY for 2017 

Jan 1, 2017 Dec 31, 2017 8,000 15,000 16,000 7,000 13,000 12,000 Inventories: Raw materials Work in process Finished goods Cost incurred: Raw material purchased Direct labour Factory rent Factory utilities Indirect material Indirect labour Operating expenses 98,000 42,000 8,000 10,000 6,000 9,000 17,000 

Instructions: 

a. Prepare a schedule showing the amount of direct materials used in production during the year 

b. Compute the amount of manufacturing overhead incurred during the year 

c. Prepare a schedule of cost of goods manufactured for SIMON COMPANY for the year ended Dec 31 in good form 

d. Prepare the cost of goods sold section of the income statement for SIMON COMPANY for the year ended Dec 31 2017 in good form

Answer 1

Answer of Part a:

Direct Material Used = Raw Material, Beginning + Raw Material Purchased – Raw Material, Ending
Direct Material Used = $8,000 + $98,000 - $7,000
Direct Material Used = $99,000

Answer of Part b:

Manufacturing Overhead = Factory Rent + Factory Utilities + Indirect Material + Indirect Labour
Manufacturing Overhead = $8,000 + $10,000 + $6,000 + $9,000
Manufacturing Overhead = $33,000

Answer of Part c: SIMON COMPANY Schedule of Cost of Goods Manufactured For the Year Ended December 31, 2017 Direct Material Raw Material Inventory, Beginning 8000 Raw Material Purchases 98000 Raw Material Available for Use 106000 Less: Raw Material, Ending 7000 Direct Material Used Direct Labor Manufacturing Overhead Total Manufacturing Cost Add: Work in Process, Beginning Total Cost of Work in Process Less: Work in Process, Ending Cost of Goods Manufactuured 99000 420001 33000 174000 15000 189000 13000 176000 Answer of Part D: SIMON COMPANY Statement of Cost of Goods Sold For the Year Ended December 31, 2017 Finished Goods, Beginning Add: Cost of Goods Manufactured Goods Available for Sale Less: Finished Goods, Ending Cost of Goods Sold 16000 176000 192000 12000 180000