Winn Company Information
Cost of Goods
Manufactured
„
„
„
Problem 2
„
Information Given
a.
b.
c.
d.
Total fixed overhead is $190,000
PerPer-unit variable manufacturing cost, $25
and there are no other variables
Total current variable manufacturing
costs equal 125 percent of current
conversion cost
The number of units produced is 10,000
Required
„
Prepare a statement of cost of goods
manufactured for 2001
Creates, produces, and markets games of
strategy
Before an employee is hired, a puzzle of
some sort must be successfully solved
You are applying for a job as an entry level
accountant
Controller wants to evaluate your
analytical skills by testing your knowledge
of basic cost terms and concepts
Information Given for 2001 cont…
cont…
e.
f.
g.
h.
Beginning workwork-inin-process is oneone-half
the cost of ending workwork-inin-process
There are no beginning or ending
inventories for raw materials or finished
goods
The cost of goods sold is $400,000
Variable overhead equals 133 percent of
direct labor costs
Direct materials, beginning balance $
+ Purchases
(8)
Available for Use
(7)
- Direct materials, ending balance
Direct materials used
Direct labor incurred
Factory overhead applied
Current Manufacturing Cost
+Work+Work-inin-process, beginning balance
Total Costs in Process
-WorkWork-inin-process, ending balance
Cost of Goods Manufactured
+Finished goods, beginning balance
Available for Sale
- Finished goods, ending balance
Cost of Goods Sold
0
?
?
0
(5) $
(3)
(4B)
(6)
(9)
(10)
(11)
(2)
?
?
?
?
?
?
?
?
0
(1)
?
0
400,000
1
Direct materials, beginning balance $
+ Purchases
(8)
Available for Use
(7)
- Direct materials, ending balance
Direct materials used
Direct labor incurred
Factory overhead applied
Current Manufacturing Cost
+Work+Work-inin-process, beginning balance
Total Costs in Process
-WorkWork-inin-process, ending balance
Cost of Goods Manufactured
+Finished goods, beginning balance
Available for Sale
- Finished goods, ending balance
Cost of Goods Sold
0
?
?
0
Information Manipulation
(5) $
?
(3)
?
(4B)
?
(6)
?
(9)
?
(10)
?
(11)
?
(2)
400,000
0
(1)
400,000
0
400,000
Information Manipulation cont…
cont…
c.
TV-MFG = 1.25 conversion cost
where conversion cost = DL+FOH
TV-MFG = 1.25 (DL+FOH)
d.
e.
h.
TV-MFG = 1.25DL + 1.25FOH
where FOH = FF-FOH +V+V-FOH
x = 10,000
BWIP = 0.5 EWIP
V-FOH = 1.33 DL
Step 3 continued…
continued…
$250,000 = 1.25 DL + 1.25 (F(F-FOH + VV-FOH)
250,000 = 1.25 DL + 1.25 FF-FOH + 1.25 VV-FOH
250,000 = 1.25 DL + 1.25 FF-FOH + 1.25 VV-FOH
250,000 = 1.25 DL +(1.25)(190,000) +(1.25)(1.33 DL)
250,000 = 1.25 DL + 237,500 + 1.6625 DL
250,000 - 237,500 = 1.25 DL + 1.6625 DL
12,500 = 2.9125 DL
DL = 12500 / 2.9125
DL = 4291.8465 ≈ 4292
a.
b.
TFFOH = $190,000
TV-MFG = $25 x
where x = 10,000 (d)
TV-MFG = ($25)(10,000) = $250,000
where TV-MFG = DM + DL + VV-FOH
Step 3
TV-MFG = 1.25 conversion cost
(c)
TV-MFG = 1.25 DL +1.25 FOH
where TV-MFG = $250,000
(b)
FOH = FF-FOH + VV-FOH
where F(a)
F-FOH = $190,000
V-FOH = 1.33 DL
(h)
Direct materials, beginning balance $
+ Purchases
(8)
Available for Use
(7)
- Direct materials, ending balance
Direct materials used
Direct labor incurred
Factory overhead applied
Current Manufacturing Cost
+Work+Work-inin-process, beginning balance
Total Costs in Process
-WorkWork-inin-process, ending balance
Cost of Goods Manufactured
+Finished goods, beginning balance
Available for Sale
- Finished goods, ending balance
Cost of Goods Sold
0
?
?
0
(5) $
?
(3)
4,292
(4B)
?
(6)
?
(9)
?
(10)
?
(11)
?
(2) 400,000
0
(1) 400,000
0
400,000
2
Step 4
Step 4B
V-FOH = 1.33 DL
where DL = 4292
V-FOH = (1.33)(4292)
V-FOH ≈ 5708
Not on Statement
Direct materials, beginning balance $
+ Purchases
(8)
Available for Use
(7)
- Direct materials, ending balance
Direct materials used
Direct labor incurred
Factory overhead applied
Current Manufacturing Cost
+Work+Work-inin-process, beginning balance
Total Costs in Process
-WorkWork-inin-process, ending balance
Cost of Goods Manufactured
+Finished goods, beginning balance
Available for Sale
- Finished goods, ending balance
Cost of Goods Sold
(h)
TFOH = FF-FOH + VV-FOH
where FF-FOH = $190,000
V-FOH = $ 5,708
TFOH = $190,000 + $5,708
TFOH = $195,708
$195,708
(a)
4A
4A
0
?
?
0
Step 5
(5) $
?
(3)
4,292
(4B) 195,708
(6)
?
(9)
?
(10)
?
(11)
?
(2) 400,000
0
(1) 400,000
0
400,000
Direct materials, beginning balance $
0
+ Purchases
(8) 240,000
Available for Use
(7) 240,000
- Direct materials, ending balance
0
Direct materials used
(5) $240,000
Direct labor incurred
(3)
4,292
Factory overhead applied
(4B) 195,708
Current Manufacturing Cost
(6) 440,000
+Work(9)
?
+Work-inin-process, beginning balance
Total Costs in Process
(10)
?
-Work(11)
?
Work-inin-process, ending balance
Cost of Goods Manufactured
(2) 400,000
+Finished goods, beginning balance
0
Available for Sale
(1) 400,000
- Finished goods, ending balance
0
Cost of Goods Sold
400,000
TV-MFG = DM + DL + VV-FOH
where TV-MFG = 250,000
DL = 4292
V-FOH = 5708
3
4A
$250,000 = DM + 4292 +5708
DM = 240,000
Steps 9 And 11
BWIP = 0.5 EWIP
{∴
let BWIP = x
EWIP = 2x
Nothing Possible
MFG +BWIP – EWIP = CGM
where MFG = 440,000
440,000 + x – 2x = 400,000
440,000 - 400,000=2x – x
40,000 = x ⇒ BWIP
3
Direct materials, beginning balance $
0
+ Purchases
(8) 240,000
Available for Use
(7) 240,000
- Direct materials, ending balance
0
Direct materials used
(5) $240,000
Direct labor incurred
(3)
4,292
Factory overhead applied
(4B) 195,708
Current Manufacturing Cost
(6) 440,000
+Work(9) 40,000
+Work-inin-process, beginning balance
Total Costs in Process
(10) 480,000
-Work(11) 80,000
Work-inin-process, ending balance
Cost of Goods Manufactured
(2) 400,000
+Finished goods, beginning balance
0
Available for Sale
(1) 400,000
- Finished goods, ending balance
0
Cost of Goods Sold
400,000
Direct materials, beginning balance $
0
+ Purchases
(8) 240,000
Available for Use
(7) 240,000
- Direct materials, ending balance
0
Direct materials used
(5) $240,000
Direct labor incurred
(3)
4,292
Factory overhead applied
(4B) 195,708
Current Manufacturing Cost
(6) 440,000
+Work(9) 40,000
+Work-inin-process, beginning balance
Total Costs in Process
(10) 480,000
-Work(11) 80,000
Work-inin-process, ending balance
Cost of Goods Manufactured
(2) 400,000
+Finished goods, beginning balance
0
Available for Sale
(1) 400,000
- Finished goods, ending balance
0
Cost of Goods Sold
400,000
4