Question

Byrnes Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the Cutting process. The following information is available regarding its May inventories: Raw materials inventory Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory Beginning Inventory $ 51,000 133,500 153,300 110,100 Ending Inventory $ 61,000 56,000 105,500 26, 250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching $ 70,000 24,000 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 20,100 80,400 157,300 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs $ 36,000 56,800 56,000 Factory Overhead Rates Cutting (150% of direct materials used) Stitching (120% of direct labor used) Sales $616,000

Answer 1

1.) Journal entries

Debit 70,000 24,000 36,000 1,00,500 56.800 S.No GL Account 1 Raw Materials Inventory 1 Accounts Payable 2 WIP Inventory 2 Raw materials Inventory 3 Factory Overheads 3 Raw Materials inventory 4 WIP Inventory 4 Factory Wages Payable 5 Factory Overheads 5 Factory Wages Payable 6 Factory Wages Payable Cash 7 Factory Overheads 7 Other Account Payable 8 WIP Inventory 8 Factory Overheads 10 Finished Goods Inventory 10 WIP Inventory 11 Cost of Goods Sold 11 Finished Goods Inventory 12 Account Receivable 12 Sales 1,57,300 Credit Narration Purchase of materials on credit 70,000 Purchase of materials on credit Direct materials used in production 24,000 Direct materials used in production Usape of indirect materials 36,000 Usage of Indirect materials cost of direct labour incurred but not paid 1.00,500 Cost of direct labour incurred but not paid cost of Indirect labour incurred but not paid 56,800 Cost of Indirect labour incurred but not paid Payment of Total Factory payroll 157,300 Payment of Total Factory payroll Cost of other factory overheads 56,000 Cost of other Factory overheads Application of overheads 150% of direct material cost (Cutting and 120% of Direct Labour cost Stitching) 1,32,480 Application of overheads 150% of direct material cost (Cutting) and 120% of Direct Labour cost (Stitching) Transfer of production to Finished goods as per Cost of goods manufactured statement 382,280 Transfer of production to Finished goods as per Cost of goods manufactured statement cost of Goods sold, as per cost of goods sold statement 4,66,130 Cost of Goods sold, as per cost of goods sold statement Sales of Goods on account 6.16,000 sales of Goods on account 56,000 1.32.480 3,82,280 4,66, 130 6,16,000

2.) Direct material cost consumed during May

Particulars Beginning Raw Material Inventory Purchases during the month Materials available for use Cost of Indirect material used Cost of Direct material used Ending Raw material Inventory Amount ($) 51,000 70,000 1,21,000 -36,000 -24,000 61,000

3) Statement of Cost of Goods manufactured

Particulars Direct material consumed during may Direct Labour used during may Factory Overheads allocated Total manufacturing costs added during May Beginning WIP Inventory Closing WIP Inventory Cost of Goods Manufactured Amount ($) 24,000 1,00,500 1,32,480 2,56,980 2,86,800 -1,61,500 3,82,280

4.) Statement of cost of goods sold

Particulars Cost of goods manufactured Beginning Finished Goods Inventory Cost of goods available for sale Closing Finished Goods Inventory Cost of Goods sold Amount ($) 3,82,280 1,10,100 4,92,380 -26,250 4,66,130

5.) Computation of Gross Profit on goods sold

Gross Profit = Sales - Cost of Goods sold

= $ 616,000 - $ 466,130

= $ 149,870