Question

Rexfield Company recorded the following transactions for the month of February: Sales were $420,000 for the month. Sales prices are determined by a markup on manufacturing cost of 40%. The costs of new inputs to the manufacturing process during the month were $285,000. Calculate the missing values in the schedule below:

Materials Work in Process Finished Goods Purchases $100,000 Beginning Inventory 16,000 (e) $8,000 18,000 Ending Inventory 18,000 Direct Materials Used 90,000 Direct Labour (b) Manufacturing Overhead (including indirect materials of $8,000)|| 115,000 Transferred to Finished Goods Cost of Goods Sold (d)

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

answer Parta) Ending inventory of material = Beginning inventory + purchases - direct material used - indirect material used = 16000+100000-90000-8000 = $ 18000 Thus the correct answer (a) material ending balance = $ 18000 Part b) - Direct Labour = Total manufacturing cost incurred during the period - direct material used - manufacturing overheads = 285000-90000-115000 = $ 80000 Thus the correct answer (b) Direct Labour = $ 80000 Part c) Transferred to finished goods = beginning wip + cost incurred during the period - ending wip = 8000+285000-18000 = $ 275000 Thus the correct answer (c.) Transferred to finished goods = $ 275000

4 5 Part d) 6 Cost of goods sold = sales Price/(1+40%) 7 = 420000/(1+40%) 3 = $ 300000 Thus the correct answer (d) cost of goods sold = $ 300000 2 Parte) 3 Beginning inventory of finished 4 = ending inventory + cost of goods sold - cost of goods manufactured 5 = 18000 + 300000 - 275000 5 = $43000 Thus the correct answer is (e)beginning inventory of finished goods = $ 43000