Question
Number 1
An analysis of the accounts of Williams Company reveals the following manufacturing cost data
for the month ended September 30, 2017.
bog
during May
Inventories
Raw materials
Beginning
$12,000
7,500
10,000
Ending
$11,300
5,000
12,000
Work in process
Finished goods
Costs incurred: raw materials purchases $62,500, direct labor $51,000, manufacturing
overhead $25,650. The specific overhead costs were: indirect labor $6,500, factory insurance
$5,000, machinery depreciation $6,000, machinery repairs $2,800, factory utilities $3,600,
miscellaneous factory costs $1,750. Assume that all raw materials used were direct materials.
Instructions
(а)
Prepare the cost of goods manufactured sched ule for the month ended 9/30/17
(b)
Show the presentation of the ending inventories on 9/30/17, Balance Sheet.
Williams Company is considering the purchase of a new automated assembly line for
its factory. The purchase would result in several changes in Williams' cost structure.
Both direct labor and indirect labor would decrease by 40%. Factory insurance
would increase to $8,000, machinery depreciation would double, machinery repairs
would decrease to $500, utilities would decrease to $2,500 and miscellaneous
factory costs would increase to $1,850. Materials usage would remain at current
levels.
(c)
Analyze the new purchase by preparing a cost of goods manufactured sched ule for
September 30, 2017 using the new data. Should Williams Company make this
purchase? Explain the factors that should be considered in the decision?
(c)
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Transcribed Image Text:Number 1 An analysis of the accounts of Williams Company reveals the following manufacturing cost data for the month ended September 30, 2017. bog during May Inventories Raw materials Beginning $12,000 7,500 10,000 Ending $11,300 5,000 12,000 Work in process Finished goods Costs incurred: raw materials purchases $62,500, direct labor $51,000, manufacturing overhead $25,650. The specific overhead costs were: indirect labor $6,500, factory insurance $5,000, machinery depreciation $6,000, machinery repairs $2,800, factory utilities $3,600, miscellaneous factory costs $1,750. Assume that all raw materials used were direct materials. Instructions (а) Prepare the cost of goods manufactured sched ule for the month ended 9/30/17 (b) Show the presentation of the ending inventories on 9/30/17, Balance Sheet. Williams Company is considering the purchase of a new automated assembly line for its factory. The purchase would result in several changes in Williams' cost structure. Both direct labor and indirect labor would decrease by 40%. Factory insurance would increase to $8,000, machinery depreciation would double, machinery repairs would decrease to $500, utilities would decrease to $2,500 and miscellaneous factory costs would increase to $1,850. Materials usage would remain at current levels. (c) Analyze the new purchase by preparing a cost of goods manufactured sched ule for September 30, 2017 using the new data. Should Williams Company make this purchase? Explain the factors that should be considered in the decision? (c)
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