Question

Tables Revid Charts SmartArt Paragraph AalbCeDdEe List Paragraph 3 5 EL Deen. Company creates, produces, and sells CPA review courses for individual use. The following information is provided: a. Conversion cost was $360,000 and was four times the prime cost b. Direct materials used in production equaled $75,000 c. Cost of goods manufactured was $415,000 d. Beginning work in process is one-half the cost of ending work in process e. There are no beginning or ending inventories for direct materials 1. Cost of goods sold was 90 percent of cost of goods manufactured g. Beginning finished goods inventory was $16,500 Required: 1.) it.) Prepare the cost of goods manufactured for the current year Prepare the cost of goods sold for the current year

Answer 1

i)

Deen Company
Cost of Goods Manufactured Schedule
For the Month of June 2017
Direct materials used	75000
Direct labor	15000
Manufacturing overhead	345000
Total current manufacturing costs	435000
Add: Beginning work in process	20000
Total cost of work in process	455000
Less: Ending work in process	40000
Cost of goods manufactured $	415000

Workings:

Conversion cost = 4 x Prime cost

$360000 = 4 x Prime cost

Prime cost = $360000/4 = $90000

Direct labor = Prime cost - Direct material used = $90000 - $75000 = $15000

Manufacturing overhead = Conversion cost - Direct labor = $360000 - $15000 = $345000

Assume ending work in process to be 'x'

Beginning work in process = x/2 = 0.5x

Current manufacturing costs + Beginning work in process - Ending work in process = Cost of goods manufactured

$435000 + 0.5x - x = $415000

$20000 = 0.5x

x = $20000/0.5 = $40000

ii)

Deen Company
Cost of Goods Sold Schedule
For the Current Year
Cost of goods manufactured $	415000
Add: Beginning finished goods	16500
Cost of goods available for sale	431500
Less: Ending finished goods	58000
Cost of goods sold $	373500

Cost of goods sold = 90% x cost of goods manufactured = 90% x $415000 = $373500

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