Question

Bubba Manufacturing Company provided the following information for the fiscal year to June 30, 2020:

Inventories                                       01/07/2019                      30/06/2020

Direct Materials                              $72,000                              $65,000

Work-in-Process                             $107,000                            $128,000

Finished Goods                                $149,500                            $141,700

Other Information:

Office cleaner’s wages	4,500
Sales Revenue	1,031,000
Raw materials purchased	235,000
Factory wages	239,700
Indirect materials	23,500
Delivery truck driver’s wages	15,400
Indirect labor	9,500
Depreciation on factory plant & equipment	32,000
Insurance	1 60,000
Depreciation on delivery truck	7,250
Utilities	2 118,750
Administrative salaries	41,250
Special Design Costs	5,000
Selling expenses	9,000
Sales Commission	2% of gross profit

1. Of the total insurance, 66⅔% relates to the factory facilities & 33⅓% relates to general & administrative costs.

2. Of the total utilities, 80% relates to the manufacturing facilities & 20% relates to the office area.

Requirements:

a) What was the amount of direct materials used in production?

b) What was the amount of manufacturing overhead costs?

c) What is the prime cost and conversion cost of the product?

d) Prepare a schedule of cost of goods manufactured for the year ended June 30, 2020,

clearly showing total manufacturing costs & total manufacturing costs to account for.

e) Prepare an income statement for Bubba Manufacturing for the year ended June 30,

2020, clearly showing cost of goods sold.

f) During the year, Bubba Manufacturing Company produced 4,000 units of product.

What was the production cost of each unit?

g) How does the format of the income statement for a manufacturing entity differ from

the income statement of a merchandising entity?

Answer 1

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