Question

The following data should be used for questions 9-12: Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January ! Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Selling and administrative expenses S 12.000 16.000 5.000 8.000 17.000 12.000 118.000 165,000 64,000 12,000 18,000 220,000 9. How much is the cost of the direct materials used? a. S118,000 b. $114,000 c. $122,000 d. $130,000 above is $130.000. How much are total manufacturing costs? 10. Assume your answer to question a. $389,000 b. $393,000 c. $295,000 d. $609,000 11. Assume your answer to question 10 above is $400,000. How much is cost of goods manufactured? a. $400,000 b. $389,000 c. $397,000 d. $403,000 12. Assume your answer to question 11 above is $420,000. How much is cost of goods sold? a. $420,000 b. $408,000 c. $295,000 d. $425,000 13. The formula for computing a predetermined overhead rate is a. estimated annual overhead costs + estimated annual operating activity. b. estimated annual overhead costs + actual annual operating activity. c. actual annual overhead costs + actual annual operating activity. d. actual annual overhead costs + estimated annual operating activity. 14. Which one of the following is an example of a period cost? a. Maintenance on factory machines b. Wages of factory workers c. Salesmen's commissions d. Depreciation on the factory building 15. When production costs are debited to Work in Process Inventory, which accounts will be credited? a. Raw Materials Inventory, Factory Labor, and Finished Goods Inventory b. Manufacturing Overhead, Factory Labor, and Cost of Goods Sold c. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead b. Accounts Payable, Factory Wages Payable, and Accumulated Depreciation

Answer 1

Solution 9:

Cost of DM used = Beginning raw material inventory + Raw material purchases - Ending raw material inventory

= $12,000 + $118,000 - $16,000 = $114,000

Hence option b is correct.

Solution 10:

Total manufacturing costs = DM + DL + Manufacturing overhead

= $130,000 + $165,000 + ($64,000 + $12,000 + $18,000) = $389,000

Hence option a is correct.

Solution 11:

Cost of goods manufactured = Total manufacturing costs + Beginning WIP - Ending WIP

= $400,000 + $5,000 - $8,000 = $397,000

Hence option c is correct.

Solution 12:

Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory

= $17,000 + $420,000 - $12,000 = $425,000

Hence option d is correct.

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