Determining and Reporting Product Cost Information
The following are 2002 data regarding Old Joe, one of the major products manufactured by the Columbus Toy Company:
Purchases of direct materials$400,000
Direct materials used402,000
Direct labor payrolls (paid during the year)180,000
Direct labor costs assigned to production220,000
Manufacturing overhead (incurred and applied)330,000
During the year 50,000 units of this product were manufactured and 51,500 units were sold. Selected information concerning inventories during the year follows:
Dec. 31Jan. 1
Work in Process6,0005,000
Finished Goods, Jan. 1 (4,000 units $19)?76,000
Prepare a schedule of the cost of finished goods manufactured for the Old Joe product in 2002.
Compute the average cost of Old Joe completed 2002.
Compute the cost of goods sold associated with the sale of Old Joe in 2002. Assume that there is a first-in, first-out (FIFO) flow through the Finished Goods Inventory account and that all units completed in 2002 are assigned the per-unit costs determined in part b.
Compute the amount of inventory relating to Old Joe that will be listed in the company’s balance sheet at December 31, 2002. Show supporting computations for the year-end amounts of materials inventory and finished goods inventory.
Explain where the $180,000 in direct labor costs assigned to production in 2002 affect the company’s 2002 income statement and balance sheet.
16-6Alternate Problems for use with Financial and Managerial Accounting, 12e
© The McGraw-Hill Companies, 2002