Selected data concerning the past year’s operations of the Ozarks Manufacturing

Question

Selected data concerning the past year’s operations of the Ozarks Manufacturing Company are as follows:

Inventories

Beginning Ending

Raw material $ 61,000 $ 81,000

Work in process 80,000 30,000

Finished goods 90,000 110,000

Other data: Direct material used $ 326,000 Total manufacturing costs charged to production during the year (includes direct material, direct labor, and manufacturing overhead applied at a rate of 60% of direct-labor cost) 686,000

Cost of goods available for sale 826,000

Selling and administrative expenses 31,000

1. What was the cost of raw materials purchased during the year?

2. What was the direct-labor cost charged to production during the year?

3. What was the cost of goods manufactured during the year?

4. What was the cost of goods sold during the year?

Explanation / Answer

Req 1. Cost of Raw material purchased: Ending inventory of RM 81000 Add: Consumed during the year 326000 Total Goods available 407000 Less: Beginning Inventory of RM 61000 Material Purchased 346000 Req 2: Total Manufacturing cost 686000 Less: Material cost 326000 Total Labor and OH cost 360000 Labour cost (360000/160*100) 225000 Req 3: Cost of Goods manufactured: Beginning Inventory of WIP 80000 Add: Total Manufacturing Cost Material 326000 Labouor 225000 OH (225000*60%) 135000 686000 Total Cost of Goods in manufacturing 766000 Less: Ending Inventory of WIP 30000 Cost of Goods manufactured: 736000 Req 4: Beginning Inventory of FG 90000 Add: Cost of Goods manufactured 736000 Total cost of goods available for sale 826000 Less: Finished Goods ending inventory 110000 Cost f Goods sold 716000

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