Question

Question 5 (8 marks) Montreal Industries Inc. had the following activities during the year: Ensure to show all calculations for full marks. Direct materials - Beginning inventory $50,000 Direct materials - Ending inventory 26,000 Direct manufacturing labour 40,000 Manufacturing overhead 30,000 Direct materials - Purchases 154,000 Ending work-in-process inventory 10,000 Beginning work-in-process inventory 2,000 Ending finished goods inventory 40,000 Beginning finished goods inventory 60,000 Required 1. Calculate the cost of direct materials used during the year. 2. Calculate the cost of goods manufactured during the year (do not need to prepare a full schedule but show all calculations) 3. Calculate the cost of goods sold during the year.

Answer 1

Answers

• All working forms part of the answer
• Requirements

A	Direct material - Beginning	$50,000
B	Direct materials - purchased	$154,000
C	Direct material - Ending	$26,000
D =A+B-C	Cost of direct material used	$178,000	Answer [1]

A	Beginning WIP Inventory		$2,000
	Cost of direct material used	$178,000
	Direct manufacturing labor	$40,000
	Manufacturing overhead	$30,000
B	Total manufacturing cost		$248,000
C = A+B	Total cost of WIP		$250,000
D	Ending WIP Inventory		$10,000
E = C-D	Cost of Goods manufactured		$240,000	Answer [2]

A	Beginning finished goods inventory	$60,000
B	Cost of Goods manufactured	$240,000
C =A+B		$300,000
D	Ending finished goods inventory	$40,000
E = C-D	Cost of Goods Sold	$260,000	Answer [3]