Pear Corporation had the following activities during 2014: Direct materials:
Beginning inventory $ 22,000
Purchases 61,600
Ending inventory 10,800
Direct manufacturing labor 18,000
Manufacturing overhead 11,500
Beginning work-in-process inventory 1,000
Ending work-in-process inventory 3,500
Beginning finished goods inventory 25,000
Ending finished goods inventory 19,000
Required:
a. What is the cost of direct materials used during 2014?
b. What is cost of goods manufactured for 2014?
c. What is cost of goods sold for 2014?
d. What amount of prime costs was added to production during 2014?
e. What amount of conversion costs was added to production during 2014?
Answer:
- What is the cost of direct materials used during 2014?
| inventory, beginnig………………………………………. | $ 22000 |
| Direct materials purchased…………………………………. | 61600 |
| Less Raw materials inventory, ending ………………… | (10800) |
| Cost of direct materials issued to production………….. | $72800 |
- What is cost of goods manufactured for 2014?
| Materials issued to production | $72,800 |
| Direct labor cost incurred | 18,000 |
| Manufacturing overhead cost | 11500 |
| Total manufacturing costs | 102,300 |
| Add: Work in process inventory, beginning | 1000 |
| Less: Work in process inventory, ending | -3500 |
| Cost of goods manufactured | $99,800 |
C
What is cost of goods sold for 2014?
| Cost of goods manufactured | $99,800 |
| Add: Finished Goods inventory, beginning | 25000 |
| Less: Finished Goods inventory, ending | -19000 |
| Cost of goods sold | $105,800 |
D
- What amount of prime costs was added to production during 2014?
(Prime Costs = Dir Mat + Dir Labor)
| Materials issued to production | $72,800 |
| Direct labor cost incurred | 18,000 |
| Prime Cost | 90,800 |
E
- What amount of conversion costs was added to production during 2014?
Conversion Costs = Dir Labor + GIF
| Direct labor cost incurred | 18,000 |
| Manufacturing overhead cost | 11500 |
| Conversion Cost | 29,500 |
