Question

Use the following for the next three questions, Benson Inc.'s accounting records reflect the following inventories: Jan. 1,20x5 Dec. 31, 20x5 Raw materials inventory $80,000 $64,000 Work in process inventory 104,000 116,000 Finished goods inventory 100,000 92,000 During 20X5, Benson purchased $1,160,000 of raw materials, incurred direct labor costs of $100,000, and incurred manufacturing overhead totaling $128,000. How much raw materials were transferred to production during 20X5.for Benson? 1) $1,176,000 2) $1,144,000 3) $1,392,000 4) $1,160,000

Answer 1

Question 1

Answer: 1) $1,176,000 -->Refer working note 1

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Question 2

Answer: 4) $1,404,000 -->Refer working note 2

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Question 3

Answer: 4) $1,368,000 -->Refer working note 3

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Working note 1 - Calculation of the amount of raw materials transferred to production
Raw materials inventory at Jan. 1, 20X5	$80,000
Add: Raw materials Purchases	$1,160,000
Total Raw Materials Available for use	$1,240,000
Less: Raw materials inventory at Dec. 31, 201X5	$64,000
Direct materials used	$1,176,000

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Working note 2 - Total manufacturing cost
Direct materials used   [Refer working note 1]	$1,176,000
Direct labor	$100,000
Manufacturing Overhead	$128,000
Total manufacturing costs               [$1,176,000 + $100,000 + $128,000]	$1,404,000

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Working note 2 - Cost of Goods Sold
Cost of Goods Manufactured	$1,360,000
Add: Finished goods inventory at Jan. 01, 20X5	$100,000
Total finished goods available for Sale	$1,460,000
Less: Finished goods inventory at Dec. 31, 20X5	$92,000
Cost of Goods Sold	$1,368,000