Question

I need help with this accounting problem.

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 conte, 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 coats, April $ 154.000 275,000 261,000 221.000 15,900 9.900 78,000 79,000 59,000 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. f. Compute the finished goods inventory as of April 1. a. b. c. Direct material used Direct materials inventory Conversion cost Work-in-process inventory Manufacturing overhead Finished goods inventory d e. f.

Answer 1

• Required a: Direct material used:

Prime cost = Direct material used + Direct labor

$154,000 = Direct material used + $59,000

Direct material used = $154,000 - $59,000

Direct material used = $95,000

• Required b: Direct material inventory:

Direct material used = Direct material inventory, april 1 + Material purchases - Direct material inventory, april 30

$95,000 = Direct material inventory, april 1 + $79,000 - $15,900

Direct material inventory, april 1 = $95,000 - $63,100

Direct material inventory, april 1 = $31,900

• Required c: Conversion cost

Indirect labor cost = Total manufacturing cost - Prime cost

= $275,000 - $154,000

= $121,000

Conversion cost = Direct labor cost + Indirect labor cost

Conversion cost = $59,000 + $121,000

Conversion cost = $180,000

• Required d: Work-in-process inventory, april 30:

Cost of goods manufactured = Beginning WIP + Total manufacturing cost - WIP april 30

$261,000 = $9,900 + $275,000 - WIP april 30

WIP april 30 = $284,900 - $261,000

WIP april 30 = $23,900

• Required e: Manufacturing overhead:

Manufacturing overhead = Conversion cost - Direct labor cost

Manufacturing overhead = $180,000 - $59,000

Manufacturing overhead = $121,000

• Required f: Finished goods inventory, April 1:

Finished goods inventory, April 1 = Finished goods, april 30 + Cost of goods sold - Cost of goods manufactured

Finished goods inventory, April 1 = $78,000 + $221,000 - $261,000

Finished goods inventory, April 1 = $38,000