Problem II — Cost of Goods Manufactured and Sold (20 points) Selected account ba
ID: 2344039 • Letter: P
Question
Problem II — Cost of Goods Manufactured and Sold (20 points)Selected account balances of Heedy Manufacturing Company appear below for 2008:
Beginning of Year End of Year
Finished Goods Inventory $25,000 $ 32,000
Work In Process Inventory 30,000 35,000
Raw Materials Inventory 46,000 26,000
Sales 360,000
Direct Labor 45,000
Factory Supervisory Salaries 18,000
Income Tax Expense 25,000
Factory Insurance 12,000
Raw Material Purchases 75,000
Administrative Expenses 17,000
Sales Returns and Allowances 15,000
Factory Depreciation 22,000
Indirect Labor 11,000
Selling Expenses 35,000
Instructions
Using the above information for Heedy Manufacturing Company, answer the following questions. Support your answers with clearly identified computations.
1. What was the amount of direct materials used in production?
2. What were the total manufacturing costs incurred?
3. What was the cost of goods manufactured?
4. What was the cost of goods sold?
5. What was the amount of net income?
Explanation / Answer
1. 46,000(beginnig) + 75,000(purchase) - 26,000(ending) = 95,000
2. 95,000(materials) + 45,000(direct labor) + 18,000(Factory Supervisory Salaries) +
12,000(Factory Insurance) + 22,000(Factory Depreciation) + 11,000(indirect labor) = 203,000
3. 30,000(WIP beginning) + 203,000(from#2) - 35,000(WIP ending) = 198,000
4. 25,000(Finished Goods Inventory, beginning) + 198,000(from #3) - 32,000(Finished Goods Inventory, ending) = 191,000
5. 360,000(sales) - 15,000(sales returns and allowances) - 191,000(cost of goods sold, from #4) - 35,000(selling expenses) - 17,000(administrative expences) - 25,000(Income Tax Expense) = 77,000
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