Question

Root Shoe Company makes loafers. During the most recent year, Root incurred total manufacturing costs of $26,300,000. Of this amount, $2,000,000 was direct materials used and $19,800,000 was direct labor. Beginning balances for the year were Direct Materials, $700,000; Work-in-Process Inventory, $1,500,000; and Finished Goods Inventory, $400,000. At the end of the year, balances were Direct Materials, $800,000; Work-in-Process Inventory, $1,200,000; and Finished Goods Inventory, $600,000. Read the requirements. Requirement 1. Analyze the inventory accounts to determine the cost of direct materials purchased during the year. Direct Materials Direct Materials Used Beginning Direct Materials Ending Direct Materials 1 Requirements Purchases Analyze the inventory accounts to determine: 1. Cost of direct materials purchased during the year. 2. Cost of goods manufactured for the year. 3. Cost of goods sold for the year. Print Print Done Done

Answer 1

1. Computation of direct materials purchased:

Direct material used (A)	2,000,000.00
Beginning Direct materials (B)	700,000.00
Ending Direct Materials (C )	800,000.00
Purchases (A-B+C)	2,100,000.00

2.Computation of Cost of goods manufactured:

Total Manufacturing costs (A)	26300000
Opening WIP (B)	1500000
Ending WIP (C )	1200000
Cost of goods manufactured (A+B-C)	26600000

3.Computation of Cost of Cost of goods Sold:

Cost of goods manufactured (A)	26,600,000.00
Opening Finished Goods (B)	400,000.00
Ending Finished Goods (C )	600,000.00
Cost of goods Sold (A+B-C)	26,400,000.00