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CHAPTER 16 ALTERNATE PROBLEMS

Problem 16.1A

An Introduction to Product Costs

Pisna, Inc. manufactures dowhats.  The manufacturing costs incurred during its first year of operations are shown as follows:

Direct materials purchased$400,000

Direct materials used385,000

Direct labor assigned to production350,000

Manufacturing overhead425,000

Cost of finished goods manufactured (100 dowhats)900,000

During the year, 100 completed dowhats were manufactured, of which 90 were sold.  (Assume 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 dowhat.

Instructions

a.

Compute each of the following and show all computations:

1.

The average per-unit cost of manufacturing a completed dowhat during the current year.

2.

The year-end balances of the inventories of materials, work in progress, and finished goods.

3.

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 $1,175,000.  Is this the amount of manufacturing costs deducted from revenue in the current year?  Explain fully.

Alternate Problems for use with Financial and Managerial Accounting, 12e16-1

© The McGraw-Hill Companies, 2002

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