Question

Road Warrior Corporation began operations early in the current year, building luxury motor homes. During the year, the company started and completed 50 motor homes 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		$	718,000
Direct labor			881,000
Income tax expense			100,000
General and administrative expenses			500,000
Manufacturing overhead			1,550,000
Selling expenses			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 for the current year.

e. Compute the ending inventories of (1) work in process and (2) finished goods for the current year.

Answer 1

solutions ora 7180oo 881000 (a) Total manufacturing costs ó Direct material used Direct labor manufacturing conteshead Total manufacturing costs 155000 o 3149000 (b) cost of finished goods manufactured. I units started and completed during the year so cost per units 60 Oud cost of finished goods manufactured th 3000000 cost of goods sold Onits sold be 48 cost per unit 6oooo cost of goods sold $ 2880000

d Gross profit : sales revenue ; souoooo Less: cost of goods sold 2880000 2160000 (e) Ending balance : work in process ! Manufacturing costs less! cost of finished goods manufactured 3149000 3000 000 work in process, Ending balance $ 149000 i finished goods cast of finished goods manufactured Lesst cost of goods sold 3000 000 finished goods, Ending balance 2880000 120 000