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Chapter 16: Q42CP (page 904)

This is the first problem in a sequence of problems for Piedmont Computer Company, a manufacturer of personal computers and tablets. During its first month of manufacturing, Piedmont Computer Company incurred the following manufacturing costs:

Balances: Beginning Ending

Direct Materials \( 10,500 \) 9,700

Work-in-Process Inventory 0 17,000

Finished Goods Inventory 0 31,000

Other information:

Direct materials purchases $ 16,000

Plant janitorial services 500

Sales salaries expense 10,000

Delivery expense 1,600

Sales revenue 1,100,000

Utilities for plant 16,000

Rent on plant 9,000

Customer service hotline costs 19,000

Direct labor 210,000

Prepare a schedule of cost of goods manufactured for Piedmont Computer Company for the month ended January 31, 2020.

Short Answer

Expert verified

The cost of goods manufactured is $235,300.

Step by step solution

01

Step-by-Step SolutionStep 1: Definition of direct materials

The direct materials are defined as the raw materials which are used in the production process directly by the company.

02

Preparation of schedule of cost of goods manufactured

Piedmont Computer Company
Schedule of cost of goods manufactured
Month Ended January 31, 2020

Amount ($)

Amount ($)

Amount ($)

Beginning WIP Inventory

$0

Direct Material Used:

Beginning Direct Materials

$10,500

Purchases of direct material

16,000

Direct Materials Available for use

26,500

Ending Direct Materials

-9,700

Direct Material Used

16,800

Direct Labor

210,000

Manufacturing Overhead

Plant Janitorial Services

500

Utilities For plant

16,000

Rent on plant

9,000

Total manufacturing Overhead

25,500

Total manufacturing cost incurred during month

252,300

Total manufacturing cost to account for

252,300

Ending WIP Inventory

-17,000

Cost of goods manufactured

$235,300

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Most popular questions from this chapter

Power Switch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected Power Switch’s facilities. Inventory was completely ruined, and the company’s computer system, including all accounting records, was destroyed.

Before the disaster recovery specialists clean the buildings, Stephen Plum, the company controller, is anxious to salvage whatever records he can to support an insurance claim for the destroyed inventory. He is standing in what is left of the accounting department with Paul Lopez, the cost accountant.

“I didn’t know mud could smell so bad,” Paul says. “What should I be looking for?”

“Don’t worry about beginning inventory numbers,” responds Stephen, “we’ll get them from last year’s annual report. We need first-quarter cost data.”

“I was working on the first-quarter results just before the storm hit,” Paul says. “Look, my report is still in my desk drawer. All I can make out is that for the first quarter, direct material purchases were \(476,000 and direct labor, manufacturing overhead, and total manufacturing costs to account for were \)505,000, \(245,000, and \)1,425,000, respectively. Wait! Cost of goods available for sale was \(1,340,000.”

“Great,” says Stephen. “I remember that sales for the period were approximately \)1,700,000. Given our gross profit of 30%, that’s all you should need.”

Paul is not sure about that but decides to see what he can do with this information. The beginning inventory numbers were:

• Direct Materials, \(113,000

• Work-in-Process, \)229,000

• Finished Goods, $154,000

Requirements

1. Prepare a schedule showing each inventory account and the increases and decreases to each account. Use it to determine the ending inventories of Direct Materials, Work-in-Process, and Finished Goods.

2. Itemize a list of the cost of inventory lost.

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:

g. Depreciation on the manufacturing plant.

Comparing managerial accounting and financial accounting

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

c. Helps in planning and controlling operations

List the four IMA standards of ethical practice, and briefly describe each.

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:

b. Cost of computer software to track WIP Inventory
See all solutions

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