Question

Question 8 4.5 pts XYZ Company recorded the following information related to their inventory accounts for 2020: January 1, 2020 37,000 38,000 22,000 December 31, 2020 Direct materials 50,000 41,000 34,000 Work in process Finished goods The following information was taken from XYZ Company's accounting records for 2020: Sales revenue $630,000 Direct materials purchased Depreciation, factory equipment Prime costs... Utilities (60% for factory; 40% for office building) ? 34,000 250,000 20,000 29,000 25,000 30,000 56,000 Sales commissions Indirect materials Depreciation, office equipment Rent, factory building Direct labor Advertising Production supervisor's salary 75,000 81,000 Additional information: 1. Direct labor comprised 35% of the conversion costs for 2020 2. The actual overhead cost for 2020 was equal to the overhead applied to production. Thus there was no overhead variance for 2020 Calculate the direct materials purchased by XYZ Company in 2020

Answer 1

Direct Materials purchased by XYZ Company in 2020. S 2,401,000 $ 2,388,000 $ 112,000 $ 2,500,000 Working Notes: XYZ COMPANY Schedule of Cost of Goods Manufactured For Year Ended December 31, 2020 Direct Materials: Direct Materials Inventory , January 1,2020 $ 37,000 Direct materials Purchase $ 2,401,000 Direct materials available for use $ 2,438,000 Less : Direct Material Inventory, December 31,2020 $ 50,000 Direct materials used Direct labor Prime Cost Factory Overhead Depreciation expense-Factory equipment 34,000 Utilities Expenses 12,000 Indirect Materails 25,000 Rent, factory Building 56,000 Production Supervisor's Salary 81,000 Total Factory overhead Cost Total Manufacturing Costs Add: Work in Process Inventory, January 1,2020 Total cost of work in process Less: Work in process Inventory, December 31,2020 Cost of goods Manufactured $ $ 208,000 $ 2,708,000 $ 38,000 $ 2,746,000 $ 41,000 $ 2,705,000

Conversion Cost = Direct Labor + Factory Overhead C = 0.35 C + $208,000 0.65 C = $208,000 C = $208,000/0.65 = $320,000 Direct Labor = 0.35 * $320,000 = $1,12000 Prime Cost = Direct Materails + Direct Labor $2,500,000 = Direct materaisl + $112,000 Direct materials = $2,500,000-$112,000 = $2,388,000 Raw materaisl available for use = Direct materials used - Ending direct materials inventory = $2,388,000 + $50,000 = $2,438,000 Direct materaisl purchased = raw materails avaialble for use - Beginning direct mateials inventory = $2,438,000-$37,000 = $2,401,000