Q.

following information relates to the Snowball Manufacturing Company:

Direct materials……………………………………………. 25,000
Indirect materials………………………………………….. 5,000
Direct labor………………………………………………… 30,000
Indirect labor……………………………………………….. 4,500
Factory overhead (excluding indirect materials and indirect labor) 15,000
Plant cost 500,000
Required: Compute the prime costs, conversion costs, and product costs.

Req- 1 Prime cost =( cost of direct Material + cost of direct labor )

Direct Material 25,000

add Direct labor 30,000
55,000

Req- 2 Conversion cost= ( Cost of direct labor + Cost of Factory over head )

Direct labor 30,000

indirect material 5,000
indirect labor 4,500
other Factory over head 15,000
total cost of Factory over head 24,500
54,500

Req- 3 Product cost ( Prime cost + cost of Factory over head )

Prime cost 55,000

total cost of Factory over head 24,500
79,500
Cost of Goods Manufactured and Sold Allure Company produces women’s clothing.
During 2004, the company incurred the following costs:

Factory rent 265,000

Direct labor 325,000
Utilities-Factory 88,000
Purchases of direct materials 465,000
Indirect materials 70,000
Indirect labors 35,000

Inventories for the year were as follows:

Jan-01 Dec-31
Direct materials 90,000 50,000
Work in process 40,000 85,000
Finished goods 115,000 95,000
Required
1. Prepare a statement of cost of goods manufactured
2. Calculate cost of goods sold.

Schedule of cost of goods manufactured

Raw material purcahse 465,000
add cost of raw material open 90,000
total cost of raw material available for use 555,000
less cost of raw material ending -50,000
cost of raw material used 505,000
Direct labor 325,000
Manufacturing over head
Utilities-Factory + Factory Rent 353,000
Indirect materials 70,000
Indirect labors 35,000
total cost of Manufacturing over head 458,000
Manufacturing cost 1,288,000 RMU+DL+FOH
add cost of wip open 40,000
total cost of wip during the year 1,328,000 MC+ wip open
less wip ending 85,000
cost of goods manufactured 1,243,000 total cost wip - wip ending

cost of goods sold

cost of goods manufactured 1,243,000
add cost of finished goods open 115,000
total cost of goods available for sales 1,358,000
less finished goods ending 95,000
cost of goods sold 1,263,000
Raw material(1-1-03) Rs. 12,500

Work-in-Process(1-1-03) 6,300

Finished Goods (1-1-03) 12,500

Sales 678,600

Sales return 15,000

Purchases of raw material 245,000

Administrative expense 70,000

Marketing expense 55,000

Indirect material 8,000

Indirect labor 4,500

Required:
1. Statement of cost of goods manufactured
2. Statement of cost of goods sold
3. Income Statement

Schedule of cost of goods manufactured

Raw material purcahse
add cost of raw material open
total cost of raw material available for use
less cost of raw material ending
cost of raw material used
Direct labor
Manufacturing over head
Other Factory over head
Repair and maintance
Factory insurance
Factory depreciation
Indirect materials
Indirect labors
total cost of Manufacturing over head
Manufacturing cost
add cost of wip open
total cost of wip during the year
less wip ending
cost of goods manufactured

cost of goods sold

cost of goods manufactured
add cost of finished goods open
total cost of goods available for sales
less finished goods ending
cost of goods sold

Income statement
sales
Less sa;es return
Net sales
cost of goods sold
Gross profit
less Period cost
administrative exp
Marketing exp
total period cost
net profit
 Raw material(31-12-03) Rs. 32,000

Work-in-Process(31-12-03) 16,500

Finished Goods(31-12-03) 25,000

Direct labor 125,000

Other factory overhead 17,600

Repair and maintenance 10,000

Insurance-factory 12,000

Depreciation-factory 22,000

Schedule of cost of goods manufactured

245,000
12,500
257,500
-32,000
225,500
 125,000

17600
10000
12000
22,000
8,000
4,500
74,100
424,600
6,300
430,900
16,500
414,400

cost of goods sold

414,400
12,500
426,900
25,000
401,900

Income statement
678,600
15,000
663,600
401,900
276,700

70,000
55,000
125,000
151,700
 Schedule of cost of goods manufactured
Raw material purcahse 100,000
add cost of raw material open 20,000
total cost of raw material available for use 120,000
less cost of raw material ending -30,000
cost of raw material used 90,000
Direct labor 350,000
Manufacturing over head
Depreciation expense-Plant and equipment 80,000
Indirect labor-Wages 5,000
Heat, Light, and power - Plant 12,000
Supervisor's salary-Plant 40,000
Property taxes-Plant 13,000
Supplies-Plant 4,000
total cost Manufactuirng over head 154,000
Manufacturing cost 594,000
add cost of wip open 35,000
total cost of wip during the year 629,000
less wip ending 25,000
cost of goods manufactured 604,000

req- 2
Income statement
sales
less cost of goods sold
cost of goods manufactured 604,000
add cost of finished goods open 35,000
total cost of goods available for sales 639,000
less finished goods ending 40,000
cost of goods sold
Gross profit
less Period cost
Supplies-Administrative office 6,000
Sales representative's salaries 190,000
Depreciation-Administrative office 30,000
total period cost
net profit
 RMU+DL+FOH

MC+ wip open

total cost wip - wip ending

1,000,000

599,000
401,000

226,000
175,000
 Schedule of cost of goods manufactured
Raw material purcahse 155,000
add cost of raw material open 18,000
total cost of raw material available for use 173,000
less cost of raw material ending -25,000
cost of raw material used 148,000
Direct labor 487,000
Manufacturing over head
Depreciation expense-Plant and equipment 88,000
Heat, light, & power - Plant 44,000
Indirect labor 25,000
Property taxes - Plant 34,000
Factory Supervisor's salary 66,000
Supplies-Plant 29,000
total cost Manufactuirng over head 286,000
Manufacturing cost 921,000 RMU+DL+FOH
add cost of wip open 23,000
total cost of wip during the year 944,000 MC+ wip open
less wip ending 9,000
cost of goods manufactured 935,000 total cost wip - wip ending

req- 2
Income statement
sales 1,500,000
less cost of goods sold
cost of goods manufactured 935,000
add cost of finished goods open 15,000
total cost of goods available for sales 950,000
less finished goods ending 38,000
cost of goods sold 912,000
Gross profit 588,000
less Period cost
Supplies - Administrative office 16,000
Sales representative's salaries 145,000
Depreciation-Administrative office 33,000
total period cost 194,000
net profit 394,000
 Schedule of cost of goods manufactured
cost of raw material used 4,680
Direct labor 6,160
total cost Manufactuirng over head 25,000
Manufacturing cost 35,840
add cost of wip open 0
total cost of wip during the year 35,840
less wip ending 0
cost of goods manufactured 35,840

req- 2
Income statement
sales 59,000
cost of goods sold 32,973
Gross profit 26,027
less Period cost
Administrative exp 14,700
office Salary 4,800
total period cost 19,500
net profit 6,527