EM 501 –Exercises - Week 8

In the ABC Company that produces watches, the following inventory levels are observed
on the given dates.
Beginning Ending
Inventory ($) Inventory ($)
March 1 March 31
Raw Material 154,000 163,000
WIP 19,000 43,000
Finished Goods 69,000 66,000

During March, the following transactions incurred:

Purchases : $ 266,000
Freight-in : 7,000
Wages and salaries 175,000 (Indirect labor: 24,000; direct labor : 151,000)
Supplies used: 22,000
Insurance expired: 1,000
Depreciation expense: 35,000
Heat, power used: 90,000

Do the following adjustments to find Cost of Goods Manufactured and Sold:

a) Calculate raw materials used.

Raw Material Inventory

Purchases
Freight-in

b) Start calculating WIP used.

WIP Inventory
Raw Material Inventory

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c) Do all other adjusting entries by creating another T-account for factory overheads.

WIP Inventory
Factory Overhead Control
Salaries and Wages Payable

Factory Overhead Control

Supplies
Prepaid insurance
Acc. Depreciation
Heat, light, power

WIP Inventory
Factory Overhead Control

d) Find Finished Goods Available for Sale

Finished Goods Inventory

WIP Inventory

e) Find Cost of Goods Sold

Cost of Goods Sold

Finished Goods

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Schedule of Cost of Goods Manufactured and Sold

Direct Materials
Beginning Inventory March 1.
Purchases
Freight-in __________
Total Purchases ____________
Materials Available
Less: Ending Inventory March 31. ____________
Direct Materials used in production
Direct Manufacturing labor
Indirect Manufacturing Costs
Indirect manufacturing labor
Heat, light and power
Supplies
Depreciation
Insurance ___________
Total Indirect Manufacturing Costs ____________
Total Current Manufacturing Costs
Add Beginning WIP Inventory March 1. ____________
Total Manufacturing Costs to Account for
Less: Ending WIP Inventory March 31. ____________
Cost of Goods Manufactured
Add Beginning FG Inventory March 1. ____________
Cost of Goods Available for Sale
Less: Ending FG Inventory March 31. ____________
Cost of Goods Sold