Chapter 2, Problem 41P

Determine the missing amounts in each of the following independent cases.

To determine

Determine the missing amounts in all the cases.

Explanation of Solution

Determine the missing amounts in all the cases.

Particulars	Case A	Case B	Case C
	Amount ($)	Amount ($)	Amount ($)
Beginning inventory, raw material	60,000 (a)	20,000	15,000
Ending inventory, raw material	90,000	10,000(i)	30,000
Purchases of raw material	100,000	85,000	70,000(q)
Direct material used	70,000	95,000	55,000(r)
Direct labor	200,000(b)	100,000	125,000
Manufacturing overhead	250,000	150,000(j)	160,000
Total manufacturing costs	520,000	345,000	340,000
Beginning inventory, work in process	35,000	20,000	15,000(s)
Ending inventory, work in process	30,000(c)	35,000	5,000
Cost of goods manufactured	525,000	330,000(k)	350,000
Beginning inventory, finished goods	50,000	40,000	20,000(t)
Cost of goods available for sale	575,000(d)	370,000(l)	370,000
Ending inventory, finished goods	30,000(e)	40,000(m)	25,000
Cost of goods sold	545,000	330,000	345,000(u)
Sales	800,000(f)	500,000(n)	480,000
Gross margin	255,000	170,000	135,000(v)
Selling and administrative expenses	105,000(g)	75,000	45,000(w)
Income before taxes	150,000	95,000(o)	90,000
Income tax expense	40,000	45,000	35,000(x)
Net income	110,000(h)	50,000(p)	55,000

Table (1)

Working Notes in Case A:

(a) Calculate the beginning inventory of raw material.

Particulars	Amount ($)
Add: Direct material used	70,000
Ending inventory of raw material	90,000
Total raw material available for use	160,000
Less: Raw material purchased during the period	(100,000)
Beginning inventory of raw material	60,000

Table (1)

(b) Calculate the direct labor.

Particulars	Amount ($)
Direct Material	70,000
Manufacturing overhead	250,000
Less: Total manufacturing costs	(520,000)
Direct labor	200,000

Table (2)

(c) Calculate the ending inventory, work in process.

Particulars	Amount ($)
Add: Beginning inventory, work in process	35,000
Direct material used	70,000
Direct labor	200,000
Manufacturing overhead	250,000
Less: Cost of goods manufactured	(525,000)
Ending inventory, work in process	30,000

Table (3)

(d) Calculate the cost of goods available for sales.

Particulars	Amount ($)
Add: Cost of goods manufactured	525,000
Beginning inventory, finished goods	50,000
Cost of goods available for sales	575,000

Table (4)

(e) Calculate the ending inventory, finished goods.

Particulars	Amount ($)
Add: Beginning inventory, finished goods	525,000
Cost of goods manufactured	50,000
Cost of goods available for sales	575,000
Less: Cost of goods sold	(545,000)
Ending inventory, finished goods	30,000

Table (5)

(f) Calculate the sales.

Particulars	Amount ($)
Add: Cost of goods sold	545,000
Gross margin	255,000
Sales	800,000

Table (6)

(g) Calculate the selling and administrative expenses.

Particulars	Amount ($)
Gross Margin	255,000
Less: Income before taxes	(150,000)
selling and administrative expenses	105,000

Table (7)

(h) Calculate net income.

Particulars	Amount ($)
Add: Selling and administrative expenses	105,000
Income tax expense	40,000
Total expense	145,000
Less: Gross margin	(255,000)
Net income	105,000

Table (8)

Working Notes in Case B:

 (i) Calculate the ending inventory, raw material.

Particulars	Amount ($)
Less: Direct materials used	95,000
Purchase of raw material	85,000
Ending inventory, raw material	10,000

Table (8)

(j) Calculate the manufacturing overhead.

Particulars	Amount ($)
Total manufacturing costs	345,000
Less: Direct labor	(100,000)
Direct material used	95,000
Manufacturing overhead	150,000

Table (9)

(k) Calculate the cost of goods manufactured.

Particulars	Amount ($)
Add: Direct material used	95,000
Direct labor	100,000
Manufacturing overhead	150,000
Beginning inventory, work in process	20,000
Total manufacturing cost	365,000
Less: Ending inventory, work in process	(35,000)
Cost of goods manufactured for the year	335,000

Table (10)

(l) Calculate the cost of goods available for sales.

Particulars	Amount ($)
Add: Cost of goods manufactured	330,000
Beginning inventory, finished goods	40,000
Cost of goods available for sales	370,000

Table (11)

(m) Calculate the ending inventory, finished goods.

Particulars	Amount ($)
Add: Beginning inventory, finished goods	40,000
Cost of goods manufactured	330,000
Cost of goods available for sales	370,000
Less: Cost of goods sold	(330,000)
Ending inventory, finished goods	40,000

Table (12)

(n) Calculate the sales.

Particulars	Amount ($)
Add: Cost of goods sold	330,000
Gross margin	170,000
Sales	500,000

Table (13)

(o) Calculate income before tax.

Particulars	Amount ($)
Gross margin	170,000
Less: Selling and administrative expenses	(75,000)
Income before tax	95,000

Table (14)

(p) Calculate net income.

Particulars	Amount ($)
Add: Selling and administrative expenses	75,000
Income tax expense	45,000
Total expense	120,000
Less: Gross margin	(170,000)
Net income	50,000

Table (15)

Working Notes in Case C:

 (q) Calculate the purchase of raw material.

Particulars	Amount ($)
Direct labor	125,000
Less: Ending inventory, raw material	(30,000)
Beginning inventory, raw material	15,000
Purchase of raw material	70,000

Table (16)

(r) Calculate the direct material used.

Particulars	Amount ($)
Add: Purchases of raw material	70,000
Beginning inventory, raw material	15,000
Total manufacturing cost	85,000
Less: Ending inventory, raw material	(30,000)
Total direct material used	55,000

Table (17)

(s) Calculate the Beginning inventory, work in process.

Particulars	Amount ($)
Add: Direct material used	55,000
Direct labor	125,000
Manufacturing overhead	160,000
Less: Cost of goods manufactured	(350,000)
Ending inventory, work in process	5,000
Beginning inventory, work in process	15,000

Table (18)

(t) Calculate the beginning inventory, finished goods.

Particulars	Amount ($)
Cost of goods available for sale	370,000
Less: Cost of goods manufactured	(350,000)
Beginning inventory, finished goods	20,000

Table (19)

(u) Calculate the cost of goods sold.

Particulars	Amount ($)
Cost of goods available for sale	370,000
Less: Ending inventory, finished goods	(25,000)
Cost of goods sold	345,000

Table (20)

(v) Calculate the gross margin.

Particulars	Amount ($)
Sales	480,000
Less: Cost of goods sold	(345,000)
Gross Margin	135,000

Table (21)

(w) Calculate the selling and administrative expense.

Particulars	Amount ($)
Gross Margin	135,000
Less: Income before taxes	(90,000)
Selling and administrative expenses	45,000

Table (22)

(x) Calculate the income tax expenses.

Particulars	Amount ($)
Income before tax	90,000
Less: Net Income	(55,000)
Income tax expenses	35,000

Table (23)