Question

need help with this please

PART A Miller Corporation is a manufacturer of precision drill bits. The following information pertains to operations during the 2018 calendar year. Sales Revenue Direct Factory Labor Indirect materials used Indirect Factory Labor Total Depreciation Total Utilities a Distribution & Customer Service Costs Insurance on Plant & Equipment Property Taxes Administrative Wages & Salaries Advertising Expenses Sales Commission $13,075.000 3.390,600 314,250 1,232,250 400,000 525.000 67,600 85.000 90,000 876,500 77.500 6% of Sales Revenue of the total depreciation, 85% relates to factory plant & equipment and 15% relates to general and administrative costs. of the total utilities, 70% relates to manufacturing and 30% relates to general and administrative costs. The property taxes 3 The property taxes should be shared: 80% manufacturing & 20% general The following additional information is also available: Inventory Data: 1/1/2018 Purchases 31/12/2018 Raw Materials $750,000 $4.330,000 $807,000 Work In Progress 1,089,400 n/a 924.000 Finished Goods 1,142,600 n/a 1.720,200 Required: a) Calculate the raw material used by Miller Corporation (2 marks) b) What is the total manufacturing overhead cost incurred by Miller Corporation during the period? (2 marks) c) Determine the prime cost & conversion cost of the product manufactured. (3 marks) d) Prepare a schedule of cost of goods manufactured for the year ended December 31, 2018, clearly showing total manufacturing cost & total manufacturing costs to account for. (5 marks) e) Prepare an income statement for Miller Corporation for the year ended December 31, 2018. List the non production overheads in order of size starting with the largest (6 marks) ) What is the unit product cost if Miller Corporation manufactured 20,000 drill bits for the year? (2 marks) How does the format of the income statement for a manufacturing concern differ from the income statement of a merchandising business? (2 marks) "The only place you will ever find S ets before worte is in the dictionary world Salmon Page 2

Answer 1

Ans(a): Computation of Raw Material used by Miller Corporation are as follow:

Following formula will be used to determine Ram Material Consumption:

Beginning Inventory + Purchase net of Return - Ending Inventory

The values given in the question are:

Raw Material Inventory on 1-1-2018 = $750,000

Raw Material Purchase = $4,330,000

Raw Material Inventory on 31-12-2018 = $807,000

Using the value given in the question,

$ Particulars RM Inventory on 1-1-18 Purchase Total RM Inventory on 31-12-18 $ Raw Material Consumption $ 7,50,000 43,30,000 $ 50,80,000 8,07,000 42,73,000

Ans(b): Computation of manufacturing overhead cost of Miller corporation during the period are as follow:

Total Manufacturing cost is the sum of cost incurred by business to manufacture goods.

Total Manufacturing cost includes Direct Material cost, Direct Labor, factory overhead cost including Salary of Production department, rent of factory, Depreciation of factory etc.

The values given in the question are:

Ram Material consumption = $4,273,000

Direct Factory Labor = $3,390,600

Depreciation = $400,000 x 85% = $340,000 (it has been stated in the question that 85% related to factory)

Utilities = $525,000 x 70% = $367,500 (it has been given in the question that 70% related to manufacturing)

Property Taxes = $90,000 x 80% = $72,000 (it has been stated that 80% related to manufacturing)

Insurance on Plant and Equipment = $85,000

$ $ 42,73,000 $33,90,600 PARTICULARS Ram Material consumption Direct Factory Labor Depreciation 3,40,000 Utilities 3,67,500 Property Taxes Insurance on Plant and Equipment $ TOTAL MANUFACTURING COST 72,000 85,000 $85,28,100

Ans(c): Computation of Prime cost and conversion cost of product manufactured are as follow:

Prime cost includes cost of Raw Material consumption and Direct Labor paid. Formula to calculate Prime cost are as follow:

Prime cost = Raw Material Consumption + Direct Labor

The values given in the question are:

Raw Material Consumption = $4,273,000

Direct Labor = $3,390,600

Using the value given,

Prime Cost= $4,273,000 + $3,390,600 = $7,663,600

Conversion cost is sum of all production cost whether direct or indirect which is necessary to convert Raw Material in to Finished Goods. formula to calculate conversion cost are as follow:

Conversion cost = Opening Work in Progress +Direct Labor + Manufacturing Overhead - Closing Work in Progress

The values given in the question are:

Direct Labor = $3,390,600

Manufacturing Overhead = $8,528,100 + $314,250 (indirect Material) + $1,232,250 (Indirect labor) = $10,074,600

using the value given in the question,

Conversion cost = $3,390,600 + $10,074,600 = $13,465,200

Ans(d): Schedule of Cost of Goods manufactured for the year ended 31st December,2018 are as follow:

Cost of Goods manufactured will include all production cost. The formula and calculation are as follow:

PARTICULARS Ram Material consumption Direct Factory Labor Manufacturing Overhead Beginning Work in Progress Total $42,73,000 $33,90,600 $1,00,74,600 $10,89,400 $1,88,27,600 9,24,000 COST OF GOODS MANUFACTURED $1,79,03,600 Less: Ending Work in Progress