Question

The controller at Lawrence Components asks for your help in sorting out some cost information. She is called to a meeting, but hands you the following information for April Prime costs, April Total manufacturing costs, April Cost of goods manufactured, April Cost of goods sold, April Direct materials inventory, April 30 Work-in-process inventory, April 1 Finished goods inventory, April 30 Direct materials purchased, April Direct labor costs, April $ 150,000 275,000 267,000 219,000 15,400 9,700 79,000 78,000 51,000 Required: a. Compute the direct material used for the month of April b. Compute the direct material inventory as of April 1. c. Compute the conversion cost for the month of April. d. Compute the work in process inventory as of April 30. e. Compute the manufacturing overhead for the month of April, 1. Compute the finished goods inventory as of April 1, b Direct material used Direct materials inventory Conversion cost C

Answer 1

Answer :-

a. Direct materials used = Prime Cost - Direct labor cost

Direct materials used = $150,000 - $51,000 = $99,000

b. Direct materials inventory = Direct materials used - Direct materials purchased + Direct materials inventory, april 30

Direct materials inventory = $99,000 - $78,000 + $15,400 = $36,400

c. Conversion cost = Total manufacturing costs - Direct materials used

Conversion cost = $275,000 - $99,000 = $176,000

d. Work-in-process inventory = WIP inventory, april 1 + Total manufacturing costs - cost of goods manufactured

Work-in-process inventory = $9,700 + $275,000 - $267,000 = $17,700

e. Manufacturing Overhead = Conversion cost - Direct labor cost

Manufacturing Overhead = $176,000 - $51,000 = $125,000

f. Finished goods inventory = Cost of goods sold + Finished goods inventory, April 30 - Cost of goods manufactured

Finished goods inventory = $219,000 + $79,000 - $267,000

Finished goods inventory = $31,000

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