Question

Diseussion Question _ Week 2 La Sim Manufacturing Company provided the following information for the year 2019: Inventories Direct Materials Work-in-Process Finished Goods 31/12/2018 31/12/2019 $84.000 $60,000 26,000 54.000 94,000 89,000 1,998,000 360,000 470,000 60,000 49,000 8,000 Other information: Sales Revenue Raw materials purchased Direct labor Indirect materials Plant supervisor's salary Office cleaner's wages Depreciation on factory plant & equipment Plant utilities Special Design Cost Insurance Office Utilities Depreciation on delivery truck Administrative salaries Salesmen commission Advertising 130,000 25.700 120,000 42,100 18,000 78,000 26,000 10,200 1 of the total insurance, 75% relates to manufacturing & 25% relates to general & administrative costs. Requirements: . $384.000 (A) What was the amount of direct materials used in production? 34.000 360,000 - (B) What was the amount of factory overhead costs? (C) What is the prime cost and conversion cost of the product? (D) Prepare a schedule of cost of goods manufactured for the year ended December 31, 2019, clearly showing total manufacturing costs & total manufacturing costs to account for. (E) Prepare an income statement for La Sim Manufacturing for the year ended December 31, 2019, clearly showing cost of goods sold. (F) During the year, La Sim Manufacturing Company produced 2,550 units of product. What was the unit product cost? PC-DM usop & Direct LABOURA MANORAGE OVOR HEADS

Answer 1

(A)	Direct materials used in production:
						$	$
	Direct materials as on 31/12/2018						84000
	Add: Materials purchased						360000
							444000
	Less:
	Direct materials as on 31/12/2019					60000
	Indirect materials					60000	120000
	Direct materials used in production						324000
(B)	Factory overhead cost:
						$
	Indirect materials					60000
	Plant supervisor's salary					49000
	Depreciation on factory plant and equipment					89000
	Plant utilities					130000
	Special design cost					25700
	Insurance			(120000*75%)		90000
	Total					443700
C)	Prime cost=Materials used+Direct labor=324000+470000=$ 794000
	Conversion cost=Direct labor+Factory overhead=470000+443700=$ 913700
(D)			Schedule of cost of goods manufactured
						$	$
	Direct materials used in production						324000
	Direct labor						470000
	Factory overhead cost						443700
	Total manufacturing cost						1237700
	Add:Work in process 31/12/2018						26000
	Total manufacturing cost to account for						1263700
	Less:Work in process 31/12/2019						54000
	Cost of goods manufactured						1209700
E)			Income statement
						$	$
	Sales revenue						1998000
	Less: Cost of goods sold
	Cost of goods manufactured					1209700
	Add: Finished goods as on 31/12/2018					94000
						1303700
	Less: Finished goods as on 31/12/2019					89000	1214700
	Gross profit						783300
	Less: Selling and administrative expenses
	Office cleaners wages					8000
	Insurance			(120000*75%)		30000
	Office utilities					42100
	Depreciation on delivery truck					18000
	Administrative salaries					78000
	Salesmen commission					26000
	Advertising					10200	212300
	Net income						571000
(F)	Unit product cost=Total manufacturing cost/Units produced=1237700/2550=$ 485.3725