Question

Chapter 2 Pl: Murdock Company has the following information from last yea Costs Incurred Raw materials purchased Direct labor Indirect labor Equipment Maintenance Insurance on Factory Rent on factory Equipment depreciation Factory supplies Advertising expenses Selling and administrative expenses Dollars 125,000 75,000 40,000 10,000 12,000 30,000 20,000 11,000 15,000 21,000 Ending Inventories Raw materials Work in process Finished goods Beginning Balance($ 10,000 20,000 30,000 Balance($) 17,000 31,000 25,000 1. 2. Determine the cost of goods manufactured. Determine the cost of goods sold (absorption costing)

Answer 1

Solution P1:

Murdock Company
1) Computation of cost of goods manufactured
Direct Materials:
Beginning Raw Material Inventory	$10,000
Add: Purchases of Raw Materials	$1,25,000
Cost of material available for use	$1,35,000
Less: Ending Raw Material Inventory	$17,000
Raw material used in production		$1,18,000
Direct Labor cost		$75,000
Factory Overhead:
Indirect Labor	$40,000
Equipment Maintenance	$10,000
Insurance on Factory	$12,000
Rent on Factory	$30,000
Equipment depreciation	$20,000
Factory Supplies	$11,000
Total Factory Overhead		$1,23,000
Total Manufacturing Costs Incurred			$3,16,000
Add: Beginning Work in process inventory			$20,000
Total Manufacturing Costs			$3,36,000
Less: Ending Work in process inventory			$31,000
Cost of goods manufactured			$3,05,000

Murdock Company
2) Computation of cost of goods sold
Cost Of goods manufactured	$3,05,000
Add: Beginning Finished goods inventory	$30,000
Cost of Goods available for sale	$3,35,000
Less: Ending Finished Goods inventory	$25,000
Cost of Goods sold	$3,10,000

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