Question

The following chart shows how costs flow through a business as a product is manufactured. Not all boxes in the chart show cost amounts. Compute the cost amounts for the boxes that contain question marks.

Raw materials purchases \(532,000 Beginning raw materials inventory \)145,500 Direct labor used in production \(350,000 Beginning work in process inventory \)84,500 Finished goods manufactured \(1,593,500 Factory overhead used in production \)750,000 Ending raw materials inventory \(175,000 Finished goods available for sale \)1,740,250 Ending finished goods inventory $139,950 Materials Activity Production Activity Sales Activity Raw materials available for use in production

Short answer

The raw material available for use in production is computed as$502,000, total WIP is computed as $1,686,500 and the cost of goods sold is computed as $1,740,250

Step-by-step solution

Computation of raw material available for use in production

$\begin{array}{c}\mathbf{Raw}\mathbf{}\mathbf{Materials}\mathbf{}\mathbf{Available}\mathbf{}\mathbf{foruse}\mathbf{}\mathbf{in}\mathbf{}\mathbf{production}\mathbf{=}\mathbf{Beginning}\mathbf{}\mathbf{Raw}\mathbf{}\mathbf{Materials}\mathbf{}\mathbf{Inventory}\mathbf{+}\mathbf{Raw}\mathbf{}\mathbf{material}\mathbf{}\mathbf{purchased}\mathbf{-}\mathbf{Ending}\mathbf{}\mathbf{inventory}\mathbf{}\mathbf{value}\\ \mathbf{=}\mathbf{145}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{532}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{175}\mathbf{,}\mathbf{000}\\ \mathbf{=}\mathbf{\$}\mathbf{502}\mathbf{,}\mathbf{000}\end{array}$

Computation of total work in process

$\begin{array}{c}\mathbf{Direct}\mathbf{}\mathbf{Material}\mathbf{}\mathbf{used}\mathbf{}\mathbf{in}\mathbf{}\mathbf{production}\mathbf{=}\mathbf{Raw}\mathbf{}\mathbf{Material}\mathbf{}\mathbf{available}\mathbf{}\mathbf{for}\mathbf{}\mathbf{use}\mathbf{}\mathbf{in}\mathbf{}\mathbf{production}\\ \mathbf{=}\mathbf{\$}\mathbf{502}\mathbf{,}\mathbf{000}\end{array}$

$\begin{array}{c}\mathbf{Total}\mathbf{}\mathbf{manufacturing}\mathbf{}\mathbf{cost}\mathbf{=}\mathbf{Direct}\mathbf{}\mathbf{materials}\mathbf{}\mathbf{used}\mathbf{}\mathbf{in}\mathbf{}\mathbf{poduction}\mathbf{+}\mathbf{Direct}\mathbf{}\mathbf{Labor}\mathbf{+}\mathbf{Factory}\mathbf{}\mathbf{Overhead}\\ \mathbf{=}\mathbf{502}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{350}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{750}\mathbf{,}\mathbf{000}\\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{602}\mathbf{,}\mathbf{000}\end{array}$

$\begin{array}{c}\mathbf{Ending}\mathbf{}\mathbf{work}\mathbf{}\mathbf{in}\mathbf{}\mathbf{process}\mathbf{=}\mathbf{Beginning}\mathbf{}\mathbf{WIP}\mathbf{}\mathbf{Inventory}\mathbf{+}\mathbf{Manufacturing}\mathbf{}\mathbf{Costs}\mathbf{-}\mathbf{Cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{Goods}\\ \mathbf{=}\mathbf{84}\mathbf{,}\mathbf{500}\mathbf{+}\mathbf{1}\mathbf{,}\mathbf{602}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{1}\mathbf{,}\mathbf{593}\mathbf{,}\mathbf{500}\\ \mathbf{=}\mathbf{\$}\mathbf{93}\mathbf{,}\mathbf{000}\end{array}$

$\begin{array}{c}\mathbf{Total}\mathbf{}\mathbf{cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{work}\mathbf{}\mathbf{in}\mathbf{}\mathbf{process}\mathbf{=}\mathbf{Cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{beginning}\mathbf{}\mathbf{WIP}\mathbf{+}\mathbf{Total}\mathbf{}\mathbf{manufacturing}\mathbf{}\mathbf{costs}\\ \mathbf{=}\mathbf{84}\mathbf{,}\mathbf{500}\mathbf{+}\mathbf{1}\mathbf{,}\mathbf{602}\mathbf{,}\mathbf{000}\\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{686}\mathbf{,}\mathbf{500}\end{array}$

Computation of cost of goods sold

$\begin{array}{c}\mathbf{Beginning}\mathbf{}\mathbf{finished}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{inventory}\mathbf{=}\mathbf{Cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{available}\mathbf{}\mathbf{for}\mathbf{}\mathbf{sale}\mathbf{-}\mathbf{Cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{manufactured}\\ \mathbf{=}\mathbf{1}\mathbf{,}\mathbf{740}\mathbf{,}\mathbf{250}\mathbf{-}\mathbf{1}\mathbf{,}\mathbf{593}\mathbf{,}\mathbf{500}\\ \mathbf{=}\mathbf{\$}\mathbf{146}\mathbf{,}\mathbf{750}\end{array}$

$\begin{array}{c}\mathbf{Cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{sold}\mathbf{=}\mathbf{Finished}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{beginning}\mathbf{}\mathbf{inventory}\mathbf{+}\mathbf{Cost}\mathbf{}\mathbf{of}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{manufactured}\mathbf{-}\mathbf{Finished}\mathbf{}\mathbf{goods}\mathbf{}\mathbf{ending}\mathbf{}\mathbf{inventory}\\ \mathbf{=}\mathbf{146}\mathbf{,}\mathbf{750}\mathbf{+}\mathbf{1}\mathbf{,}\mathbf{593}\mathbf{,}\mathbf{500}\\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{740}\mathbf{,}\mathbf{250}\end{array}$