Question

Problem 2 - Product Cost Flow Indirect Method) #24 - 27 (12 points total, 3 points each) Use the information from North Star Manufacturing Co's 2018 accounting records to answer the questions below. Mark your answer for these questions on the bubble sheet. Show calculations to support your answers in order to earn full credit. Raw materials inventory, January 1, 2018 $ 40.000 Raw materials inventory. December 31, 2018 20,000 Work in process, January 1, 2015 12.000 Work in process, December 31, 2018 18,000 Finished goods, January 1, 2018 32,000 Finished goods, December 31, 2018 40,000 Raw materials purchases 1,000,000 - Direct labor 500,000 Factory utilities applied 150,000 Indirect labor applied 50,000 Factory depreciation applied 400,000 Selling & Administrative expenses 420,000 Sales revenue 5,000,000 24. Compute the direct materials used - assume there are no indirect materials) a $1,000,000 b. $ 980,000 c. $1,060,000 0 $1,020,000 25. Assuming that the direct materials used is $1,110,000, compute the total manufacturing costs during 2018 using the following information. a $2,010,000 (b) $2,630,000 $2,210,000. d. $2,204,000. 26. Using $2,200,000 as total manufacturing costs, compute cost of goods manufactured a. $2,206,000 b. $2,208,000. c. $2,192,000 $2,194,000 27. Using $2,140,000 as the cost of goods manufactured, compute the gross profit. a $2,868,000 B. $2,852,000. c. $2,148,000 revenue - expenses d. $2,132,000. Page 9

Answer 1

24.

Beginning raw material inventory	$        40,000
Add: Raw material purchases	$   1,000,000
Less: Ending raw material inventory	$      (20,000)
Raw materials used	$   1,020,000

25.

Raw materials used	$   1,110,000
Add: Direct labor	$      500,000
Add: Factory utilities applied	$      150,000
Add: Indirect labor applied	$        50,000
Add: Factory depreciation applied	$      400,000
Total manufacturing cost	$   2,210,000

26.

Total manufacturing cost	$   2,200,000
Add: beginning work in process inventory	$        12,000
Less: Ending work in process inventory	$      (18,000)
Cost of goods manufactured	$   2,194,000

27.

Sales revenue		$   5,000,000
Less: Cost of goods sold
Cost of goods manufactured	$   2,140,000
Add: Beginning finished goods inventory	$        32,000
Less: Ending finished goods inventory	$      (40,000)
Cost of goods sold		$   2,132,000
Gross profit		$   2,868,000

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