Following are certain operating data for Durango Manufacturing Company for January 2016 Materials Inventory Work in Process Inventory Finished Goods Inventory Beginning inventory $171,000 $72,000 $225,000 Ending inventory 99,000 121,500 144,000 Total sales were $5,400,000, on which the company earned a 40% gross profit. Durango uses a predetermined manufacturing overhead rate of 120% of direct labor costs. Manufacturing overhead applied was $1,080,000. Exclusive of indirect material used, total manufacturing overhead incurred was $729,000 it was over-applied by $67,500. Required Compute the following items. (Set up T accounts for Materials Inventory, Work in Process Inventory, Finished Goods Inventory, and Manufacturing Overhead; fill in the known amounts; and then use the normal relationships among the various accounts to compute the unknown amounts.) Cost of goods sold. Cost of goods manufactured. Direct labor incurred Direct material used. Indirect material used. Total materials purchased. Materials Inventory Beg. bal. 171,000 Answer (d) (f) Answer Answer (e) End. bal. Answer Work in Process Inventory Beg. bal. 72,000 Answer (b) (c) Answer (d) Answer Answer End. bal. Answer Manufacturing Overhead Beg. bal. 0 Answer Answer (e) Answer Answer End. bal. Finished Goods Inventory Beg. bal. 225,000 Answer (a) (b) Answer End. bal. Answer

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Following are certain operating data for Durango Manufacturing Company for January 2016

	Materials Inventory	Work in Process Inventory	Finished Goods Inventory
Beginning inventory	$171,000	$72,000	$225,000
Ending inventory	99,000	121,500	144,000

Total sales were $5,400,000, on which the company earned a 40% gross profit. Durango uses a predetermined manufacturing overhead rate of 120% of direct labor costs. Manufacturing overhead applied was $1,080,000. Exclusive of indirect material used, total manufacturing overhead incurred was $729,000 it was over-applied by $67,500.

Required

Compute the following items. (Set up T accounts for Materials Inventory, Work in Process Inventory, Finished Goods Inventory, and Manufacturing Overhead; fill in the known amounts; and then use the normal relationships among the various accounts to compute the unknown amounts.)

Cost of goods sold.
Cost of goods manufactured.
Direct labor incurred
Direct material used.
Indirect material used.
Total materials purchased.

Materials Inventory
Beg. bal.	171,000	Answer	(d)
(f)	Answer	Answer	(e)
End. bal.	Answer
Work in Process Inventory
Beg. bal.	72,000	Answer	(b)
(c)	Answer
(d)	Answer
	Answer
End. bal.	Answer
Manufacturing Overhead
Beg. bal.	0	Answer
	Answer
(e)	Answer
		Answer	End. bal.
Finished Goods Inventory
Beg. bal.	225,000	Answer	(a)
(b)	Answer
End. bal.	Answer

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