Jack Co. produces, and sells CPA review courses for individual use. The following information is provided:...
- Jack Co. produces, and sells CPA review courses for individual
use. The following information is provided:
- Conversion cost was $360,000 and was four times the prime cost
- Direct materials used in production equaled $75,000
- Cost of goods manufactured was $415,000
- Beginning work in process is one-half the cost of ending work in process
- There are no beginning or ending inventories for direct materials
- Cost of goods sold was 90 percent of cost of goods manufactured
- Beginning finished goods inventory was $16,500
Requirements:
- Prepare the cost of goods manufactured for the current year
- Prepare the cost of goods sold for the current year
Homework Answers
| Jack Co. | |||
| Schedule of Cost of Goods Manufactured | |||
| Particulars | |||
| Direct materials used | $ 75,000 | ||
| Direct Labor (Bal Fig) | $ 15,000 | ||
| Prime Cost (360000/4) | $ 90,000 | ||
| Add: | Manufacturing Overheads (360000- direct labor cost) | $ 345,000 | |
| Total manufacuring costs | $ 435,000 | ||
| Add: | Beginning inventory of Work in Process | $ 20,000 | |
| Total Cost of Work in process | $ 455,000 | ||
| Less: | Ending inventory of Work in Process | $ 40,000 | |
| Cost of Goods manufactured (Given) | $ 415,000 | ||
Calculations:
| Let cost of ending work in process = x | ||
| cost of Beginning work in process =1/2 of x = | 0.5x | |
| Total manufacuring costs+ Beginning inventory of Work in Process - Ending inventory of Work in Process | = | Cost of Goods manufactured |
| 435000 + 0.5x - x | = | $ 415,000 |
| 435000-415000 | = | -0.5x + x |
| 20000 | = | 0.5x |
| x | = | 40000 |
| cost of ending work in process (x) | = | 40000 |
| cost of Beginning work in process (0.5x) | = | 20000 |
| Cost of Goods sold :- | ||
| Beginning inventory of Finished Goods | $ 16,500 | |
| Add: | Cost of Goods manufactured | $ 415,000 |
| Cost of Goods available for sale | $ 431,500 | |
| Less: | Ending inventory of Finished Goods (bal fig) | $ 58,000 |
| Cost of Goods sold (90% of 415000) | $ 373,500 |
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