Financial and Managerial Accounting: Information for Decisions
Financial and Managerial Accounting: Information for Decisions
6th Edition
ISBN: 9780078025761
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 14, Problem 16E
To determine

Overhead:

Overheads are the cost and the expenses a company incurs of the production of a particular goods or services which are not directly related to the production. It does not include labor and direct material.

Direct Material Cost:

Direct material cost is the cost that a company incurs while manufacturing a certain product or service. It includes all the cost and expenses that are directly associated with the production such as raw materials.

Direct Labor Cost:

Direct labor cost is the cost that a company incurs in giving wages to the people that are directly associated with the production work.

To compute: The amount of cost.

Expert Solution & Answer
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Explanation of Solution

Given,
Raw material purchases are $532,000.
Beginning raw materials inventory are $145,500.

Formula to calculate raw materials available for use,

    Rawmaterialsavailableforuse=( Rawmaterialpurchases +Beginning raw materials inventory )

Substitute $532,000 for raw materials inventory and $145,500 for beginning raw materials inventory.

    Rawmaterialsavailableforuse=$532,000+$145,500 =$677,500

Hence, the raw material available for use is $677,500.

Given,
Ending raw materials inventory is $175,000.

Formula to calculate direct materials used,

    Directmaterialsused=( Rawmaterialsavailableforuse Ending raw materials inventory )

Substitute $677,500 for raw materials available for use and $175,000 for ending raw materials inventory.

    Directmaterialsused=$677,500$175,000 =$502,500

Hence, the direct materials used are $502,500.

Given,
Direct labor used in production is $350,000.
Factory overhead is $750,000.
Beginning work in process inventory is $84,500.

Formula to calculate work in process inventory,

    Workinprocess=( Direct materials used+Direct labor used in production +Factory overhead+Beginning work in process inventory )

Substitute $502,500 for direct materials used $350,000 for direct labor used in production, $750,000 for Factory overhead and $84,500 for beginning work in process inventory.

    Workinprocess=$502,500+$350,000+$750,000+$84,500 =$1,687,000

Hence, the work in process is $1,687,000.

Given,
Finished goods manufactured are $1,593,500.

Formula to calculate ending work in process inventory,

    Endingworkinprocessinventory=WorkinprocessFinishedgoods

Substitute $1,687,000 for work in process and $1,593,500 for finished goods.

    Endingworkinprocessinventory=$1,687,000$1,593,500 =$93,500

Hence, the ending work in process inventory is $93,500.

Given,
Finished goods available for sale are $1,740,250.
Finished goods manufactured are 1,593,500.

Formula to calculate beginning finished goods inventory,

    Beginning finished goods inventory=( Finished goods available for sale Finished goods manufactured )

Substitute $1,740,250 for finished goods available for sale and $1,593,500 for finished goods manufactured.

    Beginning finished goods inventory=$1,740,250$1,593,500 =$146,750

Hence, the beginning finished goods inventory is $146,750.

Given,
Finished goods available for sale are $1,740,250
Ending finished goods inventory is $139,950.

Formula to calculate finished goods sold,

    Finishedgoodssold=( Finished goods available for sale Ending finished goods inventory )

Substitute $1,740,250 for finished goods available for sale and $139,950 for ending finished goods inventory.

    Finishedgoodssold=$1,740,250$139,950 =$1,600,300

Hence, the finished goods sold is $1,600,300.

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Chapter 14 Solutions

Financial and Managerial Accounting: Information for Decisions

Ch. 14 - Prob. 6DQCh. 14 - What product cost is both a prime cost and a...Ch. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQCh. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - Prob. 14DQCh. 14 - Prob. 15DQCh. 14 - Prob. 16DQCh. 14 - Prob. 17DQCh. 14 - What are the three categories of manufacturing...Ch. 14 - List several examples of factory overhead.Ch. 14 - Prob. 20DQCh. 14 - Prob. 21DQCh. 14 - Prob. 22DQCh. 14 - Prob. 23DQCh. 14 - Prob. 24DQCh. 14 - Prob. 25DQCh. 14 - Prob. 1QSCh. 14 - Prob. 2QSCh. 14 - QS 14-4 Direct and indirect costs C2 Diez Company...Ch. 14 - Classifying product costs C2 Identify each of the...Ch. 14 - QS 14-6 Product and period costs C3 Identify each...Ch. 14 - Prob. 6QSCh. 14 - Prob. 7QSCh. 14 - Prob. 8QSCh. 14 - Prob. 9QSCh. 14 - Prob. 10QSCh. 14 - Prob. 11QSCh. 14 - Prob. 12QSCh. 14 - Prob. 13QSCh. 14 - Prob. 14QSCh. 14 - Exercise 14-1 Sources of accounting information C1...Ch. 14 - Prob. 2ECh. 14 - Exercise 14-3 Cost classifications for a service...Ch. 14 - Exercise 14-4 Cost classifications for a service...Ch. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Prob. 9ECh. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Prob. 12ECh. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - Exercise 14-17 Lean business practice C6 Many...Ch. 14 - Prob. 1PSACh. 14 - Prob. 2PSACh. 14 - Prob. 3PSACh. 14 - Prob. 4PSACh. 14 - Prob. 5PSACh. 14 - Prob. 1PSBCh. 14 - Prob. 2PSBCh. 14 - Prob. 3PSBCh. 14 - Prob. 4PSBCh. 14 - Prob. 5PSBCh. 14 - Prob. 14SPCh. 14 - Prob. 1BTNCh. 14 - Prob. 2BTNCh. 14 - Prob. 3BTNCh. 14 - Prob. 4BTNCh. 14 - Prob. 5BTNCh. 14 - Prob. 6BTNCh. 14 - Prob. 7BTNCh. 14 - Prob. 8BTNCh. 14 - Prob. 9BTN
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