Answer:
a. Total manufacturing costs = $3,424,000
b. Cost of Finished Goods = $3,000,0000
c. Cost of Goods Sold = $2,880,000
d. Gross Profit = $2,160,000
e. Ending Inventory (Work in process) = $424,000
Ending Inventory (Finished Goods) = $120,000
Explanation:
Given
Direct materials used $ 708,000
Direct labor $926,000
Income tax expense $100,000
General and administrative expenses $500,000
Manufacturing overhead $1,790,000
Selling expenses $500,000
a. Compute the total manufacturing costs charged to work in process for the current year
Total Manufacturing Cost is calculated as:
Direct materials used : $ 708,000 + Direct labor : $926,000 + Manufacturing overhead : $1,790,000 =
Total manufacturing costs = $3,424,000
b. Compute the cost of finished goods manufactured for the current year.
50 motor homes were started and completed at a cost of $60,000 per unit.
Cost of Finished Goods = 50 * $60,000
Cost of Finished Goods = $3,000,0000
c. Compute the cost of goods sold for the current year.
48 out of the 50 manufactured goods were sold, meaning that there was leftover of 2
Cost of Goods Sold = $60,000 * 48
Cost of Goods Sold = $2,880,000
d. Compute the gross profit on sales for the current year.
Gross Profit = Selling Price - Cost Price
48 were sold for $105,000
Selling Price = $105,000 * 48 = $5,040,000
Gross Profit = $5,040,000 - $2,880,000
Gross Profit = $2,160,000
e.. Compute the ending inventories of (1) work in process and (2) finished goods for the current year.
1. Ending Inventory = Total Manufacturing Cost - Cost of Finished Goods
Total Manufacturing Costs = $3,424,000
Cost of Finished Goods = $3,000,000
Ending Inventory (Work in Process) = $3,424,000 - $3,000,000
Ending Inventory (Work in process) = $424,000
2.Ending Inventory = Cost of Goods Manufactured - Cost of Goods Sold
Cost of Goods Manufactured = $3,000,000
Cost of Goods Sold = $2,880,000
Ending Inventory (Finished Goods) = $3,000,000 - $2,880,000 =
Ending Inventory (Finished Goods) = $120,000
