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Determining the flow of costs through a manufacturer’s inventory accounts True Fit Shoe Company makes loafers. During the most recent year, True Fit incurred total manufacturing costs of $21,900,000. Of this amount, $2,600,000 was direct materials used and $4,800,000 was direct labor. Beginning balances for the year were Direct Materials, $700,000; Work-in-Process Inventory, $1,500,000; and Finished Goods Inventory, $1,100,000. At the end of the year, balances were Direct Materials, $800,000; Work-in-Process Inventory, $2,000,000; and Finished Goods Inventory $1,080,000. Requirements Analyze the inventory accounts to determine: Cost of direct materials purchased during the year. Cost of goods manufactured for the year. Cost of goods sold for the year.

Determining the flow of costs through a manufacturer’s inventory accounts True Fit Shoe Company makes loafers. During the most recent year, True Fit incurred total manufacturing costs of $21,900,000. Of this amount, $2,600,000 was direct materials used and $4,800,000 was direct labor. Beginning balances for the year were Direct Materials, $700,000; Work-in-Process Inventory, $1,500,000; and Finished Goods Inventory, $1,100,000. At the end of the year, balances were Direct Materials, $800,000; Work-in-Process Inventory, $2,000,000; and Finished Goods Inventory $1,080,000. Requirements Analyze the inventory accounts to determine: Cost of direct materials purchased during the year. Cost of goods manufactured for the year. Cost of goods sold for the year.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 1E: Inventory Accounts for a Manufacturing Company Fujita Company produces a single product. Costs...
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Determining the flow of costs through a manufacturer’s inventory accounts

True Fit Shoe Company makes loafers. During the most recent year, True Fit incurred total manufacturing costs of $21,900,000. Of this amount, $2,600,000 was direct materials used and $4,800,000 was direct labor. Beginning balances for the year were Direct Materials, $700,000; Work-in-Process Inventory, $1,500,000; and Finished Goods Inventory, $1,100,000. At the end of the year, balances were Direct Materials, $800,000; Work-in-Process Inventory, $2,000,000; and Finished Goods Inventory $1,080,000.

Requirements

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.
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