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

A) Cost of Goods Manufactured B) Conversion Cost for 2020 C) Sales Commission for 2020 $ $ $ 455,000 316,000 25,000 $ $ $ 142,000 90,000 232,000 Working Notes: XYZ COMPANY Schedule of Cost of Goods Manufactured For Year Ended December 31, 2020 Direct Materials: Direct Materials Inventory , January 1,2020 $ 50,000 Direct materials Purchase $ 129,000 Direct materials available for use $ 179,000 Less : Direct Material Inventory, December 31,2020 $ 37.000 Direct materials used Direct labor Prime Cost Factory Overhead Depreciation expense-Factory equipment $ 37,000 Utilities Expenses 18.000 Indirect Materails $ 29,000 Rent, factory Building $ 60,000 Production Supervisor's Salary $ 82,000 Total Factory oveerhead 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 $ $ $ $ $ $ 226,000 458,000 38,000 496,000 41,000 455,000

XYZ COMPANY Schedule of Cost of Goods sold For Year Ended December 31, 2020 Beginning Finished Goods Inventory Add: Cost of goods Manufactured Cost of goods available for Sale Less: Ending Finished Goods Inventory Cost of Goods Sold $ $ $ $ $ 32,000 455,000 487,000 34,000 453,000 $ $ $ 590,000 453,000 137,000 XYZ COMPANY Income Statement For Year Ended December 31, 2020 Sales Revenue Less: cost of goods Sold Gross Profit Less: Operating Expenses Utilities expense $ Sales Commission Depreciation Office Equipment Advertising $ Total Operating Expense Net Income 12,000 25,000 33,000 57,000 $ $ 127,000 10,000 Opearting Expenses = Gross Profit - Net Income = $137,000-$10,000 = $127,000 Opearting expenses = Utilities Expense + Sales Commission + Depreciation of office Equipment- Advertising $127,000 = $12,000+Sales Commission + $33,0000+$57,000 Sales Commission = $127,000-$12,000-$33,000-$57,000 = $25,000 Converstion Cost = Direct Labor + Manufacturing Overhead = $90,000 + $226,000 = $316,000