Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 14

Cost Concepts

The following information comes from the accounting records for Santa Cruz, Inc., for March:

Direct material inventory, March 1	$6,000
Direct material inventory, March 31	5,000
Work-in-process inventory, March 1	3,000
Work-in-process inventory, March 31	2,000
Finished goods inventory, March 1	18,000
Finished goods inventory, March 31	24,000
Direct materials purchased during March	80,000
Direct labor costs, March	64,000
Manufacturing overhead, March	84,000

Required

Compute, for the month of March:

a. Total prime costs.

b. Total conversion costs.

c. Total manufacturing costs.

d. Cost of goods manufactured.

e. Cost of goods sold.

Step 1 of 5

Prepare the cost of goods manufactured and sold statement before computing the required costs.

Beginning work-in-process inventory, March 1		$ 3,000
Manufacturing costs during the year
Direct materials:
Beginning inventory, March 1	$ 6,000
Add: Purchases		$ 80,000
Direct materials available		$ 86,000
Less: Ending inventory, March 31	$ 5,000
Direct material used		$ 81,000
Direct labor		$ 64,000
Manufacturing overhead		$ 84,000
Total manufacturing costs incurred		$ 229,000
Total work in process during the year		$ 232,000
Less: Ending work-in-process, March 31		$ 2,000
Cost of goods manufactured		$ 230,000
Add: Beginning finished goods inventory, March 1		$ 18,000
Finished goods available for sale		$ 248,000
Less: Ending finished goods inventory, March 31		$ 24,000
Cost of goods sold			$ 224,000