Question

Problems show work in order to receive partial credit for correct process. Hint: T-accounts is a good way to solve this. (18 pts) Inventory Balances Materials Work in Process T. Use the following information to perform the calculations below. Be sure to April. 1 2019 $50,000 $38,000 20,000 28,000 18,000 30,000 Finished Goods 16,000 108,000 27,000 dmimistrative salaries Advertising expense S 20,000 Materials purchased 12,000 Sales 0,000 Manufacturing Overhead Direct labor 1. Alex Company's cost of direct materials used in production. 2. Alex Company's total manufacturing cost incurred during the month. 3. Alex Company's total manufacturing costs. 4. Alex Company's cost of goods manufactured. 5. Alex Company's cost of goods sold. 6. Alex Company's income from operations.

Answer 1

Solution 1:

Cost of direct material used in production = Beginning material inventory + Material purchased - Ending material inventory

= $50,000 + $16,000 - $38,000 = $28,000

Solution 2:

Total manufacturing cost incurred during the month = Direct material used + Direct labor + Manufacturing overhead

= $28,000 + $30,000 + $27,000 = $85,000

Solution 3:

Total manufacturing cost = Beginning WIP + Manufacturing cost incurred during the period

= $18,000 + $85,000 = $103,000

Solution 4:

Cost of goods manufactured = Total manufacturing cost - Ending WIP = $103,000 - $20,000 = $83,000

Solution 5:

Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory

= $30,000 + $83,000 - $28,000 = $85,000

Solution 6:

Income from operations = Sales - COGS - Operating expenses

= $108,000 - $85,000 - ($20,000 + $12,000) = ($9,000)