Aqua-Marine manufactures fiberglass fishing boats. The manufacturing costs incur
ID: 2329718 • Letter: A
Question
Aqua-Marine manufactures fiberglass fishing boats. The manufacturing costs incurred during its first year of operations are as follows. Direct materials purchased Direct materials used Direct labor Manufacturing overhead Cost of finished goods manufactured (112 boats) 225,000 216,000 200,000 350,000 728,000 During the year, 112 completed boats were manufactured, of which 100 were sold. (Assume that the amount of the ending inventory of finished goods and the cost of goods sold are determined using the average per-unit cost of manufacturing a completed boat.) Required a-1. Compute the average per-unit cost of manufacturing a completed boat during the current year a-2. Compute the year-end balances of the inventories of materials, work in process, and finished goods. a-3. Compute the cost of goods sold during the year. b. For the current year, the costs of direct materials purchased, direct labor assigned to production, and actual manufacturing overhead total $775,000. Is this the amount of manufacturing costs deducted from revenue in the current year?Explanation / Answer
Solution a1:
Average cost per unit of manufacturing a completed boat = Cost of finished goods manufactured/ Nos of boats manufactured
= $728,000 / 112 = $6,500 per boat
Solution a2:
Year end balance of material inventory = Material purchased - Material used = $225,000 - $216,000 = $9,000
Year end balance of WIP Inventory = Total manufacturing cost incurred - Cost of finished goods produced
= ($216,000 + $200,000 + $350,000) - $728,000 = $38,000
Year end balance of finished goods inventory = Cost per unit * Nos of boats in ending inventory
= $6,500 * (112-100) = $78,000
Solution a3:
Cost of goods sold = Average cost per unit * Nos of units sold = $6,500 * 100 = $650,000
Solution b:
No, $775,000 is not the amount of manufacturing cost that will be deducted from revenue in the current year. In fact, cost of goods sold amounting $650,000 will be deducted from revenue in the current year.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.