Question

Cost Assignment Methods Brody Company makes industrial cleaning sevents. Various chemicals, detergent, and water ied together and the bottled in 10 gallon drums Brody provided the following information for last Raw materials purchases $280,000 Direct labor 140,000 Depreciation on factory coment 45,000 Depreciation on factory building 30,000 Depreciation on headquarters building 60,000 Factory insurance 15,000 Property taxes Factory 20,000 Headquarters 18,000 Utilities for factory 34,000 ities for sales office 2.400 Administrative salaries 150,000 Indirect labor salaries 159,000 Sales office salaries 90,000 Beginning balance, raw materials 127,000 Beginning balance, work in process 124.000 Beginning balance, finished goods 84,000 Ending balance, raw materials 102,000 Ending balance, work in process 130,000 Ending balance, finished goods 85,000 Last year, Brody completed 100,000 units Sales revenus equaled $1,200,000, and Body paid a sales commission of percent of sales

Answer 1

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1)	Direct materials used.in production:
	Beginning balance, Raw Materials	127000
	Raw materials purchases	280000
	Total materials available for use	407000
	less: Ending balance, Raw Materials	102000
	Direct materials used in production	305000
2)	Total prime cost:
	Direct material used	305000
	Direct labor	140000
	Total Prime Cost	445000
3)	Total conversion cost:
	Direct labor	140000
	Depreciation on factory equipment	45000
	Depreciation on factory building	30000
	Factory insurance	15000
	Factory taxes	20000
	Utilities for factory	34000
	Indirect labor salaries	159000
	Total conversion cost	443000
4)	Statement of Cost of goods manufactured:
	Material used		305000
	Direct labor		140000
	Manufacturing overhead
	Depreciation on factory equipment	45000
	Depreciation on factory building	30000
	Factory insurance	15000
	Factory tax	20000
	Utilities for factory	34000
	Indirect labor salaries	159000	303000
	Beginning balance, WIP		124000
	Total manufacturing cost		872000
	less: Ending balance, WIP		130000
	Cost of goods manufactured		742000
	The unit product cost = Cost of goods manufactured / num of Units
	The unit product cost = 742,000/100,000 =	7.42
5)	Cost of goods sold statement:
	Cost of goods manufactured	742000
	add: Beginning balance, Finished Goods	84000
	Total goods available for sale	826000
	less: Ending balance, Finished Goods	85000
	Cost of goods sold	741000
6)	Income statement:
			(% on Sale)
	Sales revenue	1200000	100.00%
	less: Cost of goods sold	741000	61.75%
	Gross margin	459000	38.25%
	less: sales & administrative expense:
	Sales office salaries	90000	7.50%
	Sales commission (on sale= (5% X1200000)	60000	5.00%
	Utilities for sales office	2400	0.20%
	Headquarter property taxes	18000	1.50%
	Depreciation on headquarters building	60000	5.00%
	Administrative salaries	150000	12.50%
	Total sales and administrative expenses	380400	31.70%
	Operating income	78600	6.55%