Question

Sky Tracker Corporation manufactures a telecommunications device. During its first year of operations, the company started and completed 50 devices at a cost of $60,000 per unit. Of these, 48 were sold for $105,000 each and two remain in finished goods inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows. Direct materials used Direct labor Income tax expense General and administrative expenses Manufacturing overhead Selling expenses $ 749,000 959,000 100,000 500,000 1,500,000 500,000 Required: a. Compute the total manufacturing costs charged to work in process for the current year. b. Compute the cost of finished goods manufactured for the current year. c. Compute the cost of goods sold for the current year. d. Compute the gross profit on sales and net income for the current year. e. Compute the dollar value of ending inventories of (1) work in process and (2) finished goods for the current year. a. b Total manufacturing costs charged to work in process for the current year. Cost of finished goods manufactured Cost of goods sold Gross profit on sales C. d. Net income e-1 Ending inventory of work in process Ending inventory of finished goods e-2

Answer 1

B A 1 a. 2 Direct materials 3 Direct labor 4 Manufacturing overhead 5 Total manufacturing cost charged to WIP 6 7 b. 8 Cost of finished goods manufactured 9 $749,000 $959.000 $1.500.000 $3,208,000 $3,000,000 9 10 c. $2,880,000 $2,160,000 11 Cost of goods sold 12 13 d. Gross profit on sales 14 (Sales - Cost of goods sold) Net income (Gross profit - General and adm expenses - 15 Income tax expense) 16 17 -1. 18 Ending inventory of work in process 19 20 -2. 21 Ending inventory of finished goods $1,560,000 $208,000 $120,000

Calculations are shown below: B a. A 1 2 Direct materials 3 Direct labor 4 Manufacturing overhead 5 Total manufacturing cost charged to WIP 6 7 b. 8 Cost of finished goods manufactured 9 749000 959000 1500000 =SUM(B2:B4) =50*60000 10 c. =48*60000 =(48*105000)-B11 11 Cost of goods sold 12 13 d. Gross profit on sales 14 (Sales - Cost of goods sold) Net income (Gross profit - General and adm expenses - 15 Income tax expense) 16 17 e-1. 18 Ending inventory of work in process 19 20 -2. 21 Ending inventory of finished goods =B14-500000-100000 =B5-BS =2*60000