Chapter 18, Problem 16E

To determine

Concept Introduction:

Schedule of cost of goods manufactured: A schedule of cost of goods manufactured is a schedule explaining the flow of costs from raw material to the result as cost of goods manufactured for a period. The cost of goods manufactured amount if transferred to the finished goods inventory and is used to calculate cost of goods sold on income statement.

Cost of goods sold: The cost of goods sold can be defined as the cost incurred in order to convert a raw material into finished goods. The cost of goods sold includes direct expenses i.e. direct material, direct labor and overheads like - variable manufacturing overheads and fixed manufacturing overhead as well. It is subtracted from the sales to know the gross profit of the business.

Requirement 1

To compute:

Raw material available for use in production

Answer to Problem 16E

Solution:

Raw material available for use in production = $ 677,500.

Explanation of Solution

The raw material available for use in production as under $–$

$Rawmaterialavailable=BeginningRawmaterialinventory+Rawmaterialpurchases$

Given,

• Beginning raw material inventory = $ 145,500

• Raw material purchases = $ 532,000

$\begin{array}{l}Rawmaterialavailable=BeginningRawmaterialinventory+Rawmaterialpurchases\\ Rawmaterialavailable=\$145,500+\$532,000\\ Rawmaterialavailable=\$677,500\end{array}$

The raw material available for use in production = $ 677,500.

Conclusion

Thus, the raw material available for use in production has been calculated.

To determine

Requirement 2

To compute:

Direct materials used in production

Answer to Problem 16E

Solution:

Direct materials used in production = $ 502,500

Explanation of Solution

The raw material used in production is calculated as under $–$

Given,

• Raw material available for use in production = $ 677,500

• Ending raw material = $ 175,000

$Rawmaterial\text{ used }=Rawmaterialavailableforuseinproduction-RawmaterialEnding$

$\begin{array}{l}Rawmaterial\text{ us}ed=\$\text{ 677,500}-\$\text{ 175,000}\\ Rawmaterialused=\$\text{ 502,500}\end{array}$

The raw material used in production is $ 502,500

To determine

Requirement 3

To compute:

Total work in process

Answer to Problem 16E

Solution:

Total work in process = $ 1,687,000

Explanation of Solution

The total work in process is calculated as under $–$

$\begin{array}{l}Totalworkinprocess=\\ Directmaterialused\\ +DirectLabor\\ +Factoryoverheads\\ +Beginningworkinprocessinventory\end{array}$

Given,

• Direct material used = $ 502,500

• Direct Labor = $ 350,000

• Factory overheads = $ 750,000

• Beginning work in process inventory = $ 84,500

$\begin{array}{l}Totalworkinprocess=\text{ \$ 502,500 }+\text{ \$ 350,000}+\text{ \$ 750,000 }+\$\text{ 84,500}\\ Totalworkinprocess=\$1,687,000\end{array}$

The total work in process is = $ 1,687,000

Conclusion

Thus, the total work in process has been calculated.

To determine

Requirement 4

To compute:

Ending work in process inventory

Answer to Problem 16E

Solution:

Ending work in process inventory = $ 93,500

Explanation of Solution

The ending work in process inventory is calculated as under $–$

$Endingworkinprocessinventory=Totalworkinprocess–Finishedgoodsmanufactured$

Given,

• Total work in process = $ 1,687,000

• Finished goods manufactured = $ 1,593,500

$\begin{array}{l}Endingworkinprocessinventory=Totalworkinprocess–Finishedgoodsmanufactured\\ Endingworkinprocessinventory=\$1,687,000-\$1,593,500\\ Endingworkinprocessinventory=\$93,500\end{array}$

The ending work in process inventory = $ 93,500.

Conclusion

Thus, the ending work in process inventory has been computed.

To determine

Requirement 5

To compute:

Beginning finished goods inventory

Answer to Problem 16E

Solution:

Beginning finished goods inventory = $ 146,750

Explanation of Solution

The beginning finished goods inventory is calculated as under $–$

$\begin{array}{l}Beginningfinishedgoodsinventory=\\ Finishedgoodsavailableforsale\\ –Finishedgoodmanufactured\end{array}$

Given,

• Finished goods available for sale = $ 1,740,250

• Finished goods manufactured = $ 1,593,500

$\begin{array}{l}Beginningfinishedgoodsinventory=\$1,740,250-\$1,593,500\\ Beginningfinishedgoodsinventory=\$146,750\end{array}$

The beginning finished goods inventory = $ 146,750.

Conclusion

Thus, the beginning finished goods inventory has been computed.

To determine

Requirement 6

To compute:

Finished goods sold

Answer to Problem 16E

Solution:

Finished goods sold = $ 1,600,300

Explanation of Solution

The finished goods sold will be calculated as under $–$

$Finishedgoodssold=Finishedgoodsavailableforsale–Endingfinishedgoodsinventory$ Given,

• Finished goods available for sale = $ 1,740,250

• Ending finished goods inventory = $ 139,950

$\begin{array}{l}Finishedgoodssold=Finishedgoodsavailableforsale–Endingfinishedgoodsinventory\\ Finishedgoodssold=\$1,740,250-\$139,950\\ Finishedgoodssold=\$1,600,300\end{array}$

The finished goods sold = $ 1600,300.

Conclusion

Thus, the finished goods sold has been calculated.