MANAGEMENT ACCOUNTING

COST OF GOODS MANUFACTURED (CGM) COST OF GOODS SOLD (CGS)

Q.1 The December 31, 2020 trial balance of Crockett Company showed:
Sales .........................$14,500,500 Sales returns and
Purchases (net)............$2,400,000 allowances…......................... $25,200
Transportation in............. $32,000 Factory overhead…………$1,885,600
Direct labor....…………$3,204,000 Advertising expense...............$155,000
Sales salaries...................$200,000 Delivery expense...........………65,000

Inventories: Ending Beginning

Finished goods................. $567,400 $620,000
Work in process.................136,800 129,800
Materials......................... 196,000 176,000
Determine:
(1) The total manufacturing cost
(2) The cost of goods manufactured, and
(3) The cost of goods sold.

Q.2 The following data are provided by the controller of Pensacola Corporation:
Cash………………………………………………… $ 240,000
Account receivable…………………………………. 348,000

Inventories: January 1 December 31

Finished goods……………. $54,200 $66,000

Work In process………….. 29,800 38,800
Materials…………………… 88,000 64,000
.
Materials purchased…………………………………………………………..... $366, 000
Sales Returns & Discounts……..………………………………………….. …....…8, 000
Factory overhead (Excluding depreciation)………………………… ……....……468, 400
Marketing and Administration Expenses (Excluding depreciation)……….......… 344, 200
Sales………………………………………………………………………… ......1,844, 000
Direct labor ………………………………………………………….….….……...523, 600
Freight on material purchased………………………………………………………..6, 600
Rental income……………………………………………………………………... 64, 000
Interest on bond payable…........................................................................................ 21, 100
Depreciation (90% manufacturing, 10% marketing and administration Expenses) 116, 000

Required: Prepare a cost of goods sold statement and income statement for the period
ending December 31. The Company’s tax rate is 40%

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Q.3 The following information was extracted from accounting records of Pine View Products:

Raw Material Purchases…………………………………………………. $175,000

Direct Labor………………………………………………………………..254,000
Indirect Labor…………………………………………………………….. 109,000
Selling & Administrative Salaries…………………………………………133,000
Building Depreciation*…………………………………………………… 80,000
Other Selling & Administrative Expenses…………………………………195,000
Other Factory Costs………………………………………………………. 344,000
Sales Revenue ($260 per unit)…………………………………………...1,495,000
Interest Expense ………………………………………………………… 12,000

*Seventy percent of the company’s building is devoted to production activity; the

remaining thirty percent was used for selling and administrative functions.

Inventory Data: January 1 December 31

Raw Material $15,800 $18,200

Work in Process 35,700 62,100
Finished Goods* 111,100 97,900

*The January 1 and December 31 finished-goods inventory consisted of 1,500 units and
1,200 units.

Required:
a) Cost of Goods Manufactured
b) Cost of Goods Sold
c) Net Income for 2004, assuming 40% income tax rate
d) Number of Completed Units manufactured during the year.

Q.4
Moonlight Company‘s purchased materials for $110,000 during March and the cost of goods
sold for March was $345,000. Factory overhead was 50%of direct labor cost. Other information
relating to inventories and production for March is as follows:

INVENTRIES BEGINNING ENDING

Finished goods ………………….. $102,000 $105,000
Work in process ………………… 40,000 36,000
Materials………………………… 20,000 26,000

Required:
a. Compute the prime cost charged to WIP process during March.
b. Prepare a schedule of cost of goods manufactured for March.
c. Compute the conversion' cost charged to work in process during March.

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Q.5: The following data refer to Twisty Pretzel Company for the year 2016 -

Work in process inventory, 1/1/16……..……………………. $8,400

Selling and administrative expenses…………………………. 14,800
Insurance on factory and equipment………………… …….…. 3,700
Work in process inventory, 31/12/16………………….……. 8,800
Finished Goods inventory, 1/1/16..…………………………. 14,500
Cash Balance, 12/31/x1 ……..…………………. 6,000
Indirect Material used ……..…………………. 3,900
Depreciation on factory equipment ……..…………………. 2,200
Raw Material inventory, 1/1/16……………………….…….. 11,100
Property taxes on factory ……..………………. 2,300
Transportation in ……………………………….. 1,200
Finished Goods inventory, 31/12/16 ………………..……… 15,500
Purchase of raw material in 2016………………………………. 39,100
Utilities for factory ……..…………………. 7,000
Utilities for sales and administrative offices ………………… 2,600
Other Selling and administrative expenses…………………. 4,400
Indirect-labor cost incurred ……….…………………. 29,900
Depreciation on factory building ………………………. 2,800
Depreciation on cars used by sales personnel………………. 1,000
Direct-labor cost incurred ……….…………………. 69,000
Raw Material inventory, 31/12/16………………………..… 10,000
Accounts Receivable………………………………………………..4,500
Rental for warehouse space to store raw material…….……. 4,100
Rental for space for company president’s office …………. 1,900
Sales Revenue ……………………. 215,800
Factory Supervisor Salary ……..………………. 7,100
Interest Expense ………………………………… 1,500

Required: Prepare the company’s schedule of cost of goods sold & Income Statement for 2016.
The company tax rate is 40%.