Question

1. Cost Assignment Methods

   Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water are mixed together and then bottled in 10-gallon drums. Brody provided the following information for last year:

   Raw materials purchases	$280,000
   Direct labor	140,000
   Depreciation on factory equipment	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
   Utilities for sales office	1,800
   Administrative salaries	150,000
   Indirect labor salaries	153,000
   Sales office salaries	90,000
   Beginning balance, raw materials	121,000
   Beginning balance, work in process	124,000
   Beginning balance, finished goods	84,000
   Ending balance, raw materials	105,000
   Ending balance, work in process	130,000
   Ending balance, finished goods	85,000

   Last year, Brody completed 100,000 units. Sales revenue equaled $1,200,000, and Brody paid a sales commission of 5 percent of sales.

   Required:

   1. Calculate the direct materials used in production for last year.

   $

   2. Calculate total prime cost.

   $

   3. Calculate total conversion cost.

   $

   4. Prepare a cost of goods manufactured statement for last year.

   Brody Company
   Statement of Cost of Goods Manufactured
   For Last Year
   Direct materials	$
   Direct labor
   Total manufacturing cost	$
   	$

   Calculate the unit product cost. If required, round your answer to the nearest cent.

   $

   5. Prepare a cost of goods sold statement for last year.

   Brody Company
   Statement of Cost of Goods Sold
   For Last Year
   	$
   	$

   6. Prepare an income statement for last year. Show the percentage of sales that each line item represents. When required, round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.

   Brody Company
   Income Statement
   For Last Year
   		Percent
   	$	%
   		%
   	$	%
   Less: Operating expenses
   		%
   		%
   	$	%

Answer 1

1) Direct materials used in production for last year Raw materials purchases Add: Beginning balance, raw materials Raw materials available Less: Ending balance, raw materials Direct materials used in production 280000 121000 401,000 -105000 296,000 2) Total prime cost (Direct Material used + Direct labor) Direct materials used in production Add: Direct labor Total prime Cost 296,000 140,000 436,000 140,000 3) Total conversion cost (Direct labor + Manufacturing overheads) Direct Labour Add: Manufacturing overheads Depreciation on factory equipment Depreciation on factory building Factory insurance Factory taxes Utilities for factory Indirect labor salaries Total Conversion Cost 45000 30000 15000 20000 34000 150000 434,000

296000 140000 4) Cost of goods manufactured statement Brody Company Statement of Cost of Goods Manufactured For Last Year Direct materials Direct labor Manufacturing overheads: Depreciation on factory equipment Depreciation on factory building Factory insurance Factory taxes Utilities for factory Indirect labor salaries Total Add:Beginning balance, work in process Total manufacturing cost Less: Ending balance, work in process Cost of goods manufactured Cost per unit ($724000 / 100000 units) 45000 30000 15000 20000 34000 150000 730,000 124000 854,000 -130000 724,000 7.24