Question

XYZ Company recorded the following information related to their inventory accounts for 2020: Direct materials Work in process Finished goods January 1, 2020 50,000 38,000 32,000 December 31, 2020 37,000 41,000 34,000 The following costs were taken from XYZ Company's accounting records for 2020: $129,000 37,000 590,000 30,000 Sales revenue ......................................... : : Direct materials purchased ....... .................. Depreciation, factory equipment ......................... Sales revenue Utilities (60% for factory; 40% for office building) Sales commissions ............. Indirect materials. ................... Depreciation, office equipment Rent, factory building .............. Net income Direct labor ..................... Advertising Production supervisor's salary ......... ........ : ........................ 29,000 33,000 60,000 10,000 90,000 57,000 82,000 ....... Assume that the actual overhead cost for 2020 was equal to the overhead applied to production. Thus there was no overhead variance for 2020.

Calculate XYZ Company's:

A)Cost of Goods Manufactured for 2020

B)Conversion costs for 2020

C)Sales Commission for 2020

Answer 1

Calculate Cost of goods manufactured

Direct material used (50000+129000-37000)	142000
Direct labor	90000
Overhead
Depreciation factory equipment	37000
Utilities (30000*60%)	18000
Indirect material	29000
Rent	60000
Production supervisor salary	82000
Total manufacturing cost	458000
Beginning work in process	38000
Ending work in process	-41000
Cost of goods manufactured	455000

b) Conversion cost includes direct labor and manufacturing overhead

Direct labor	90000
Overhead
Depreciation factory equipment	37000
Utilities (30000*60%)	18000
Indirect material	29000
Rent	60000
Production supervisor salary	82000
Total Conversion cost	316000

c) Sales commission

Sales	590000
Cost of goods sold (455000+32000-34000)	453000
Gross profit	137000
Utilities	-12000
Depreciation	-33000
Advertising	-57000
Net income	-10000
Sales commission	25000