Answered Essay: Cornerstones Of Cost Management Exercise 2.14 Questions 3-5 Calculate the missing values for each independent situations:

Cornerstones Of Cost Management Exercise 2.14 Questions 3-5 Calculate the missing values for each independent situations:

3. Beginning work in progress (WIP) was $116,000, and ending WIP was $117,300. If total manufacturing costs were $349,000, what was the cost of goods manufactured?

4. If the conversion cost is $84 per unit, the prime cost is $55 and the manufacturing cost per unit is $105, what is the direct materials cost per unit?

5. Total manufactureing costs for August were $412,000. Prime cost was $64,000 and beginning WIP was $76,000. The costs of goods manufactured was $434,000. Calculate the cost of overhead for August and the cost of WIP.

Expert Answer

 

3) Beginning work in progress (WIP) was $116,000, and ending WIP was $117,300. If total manufacturing costs were $349,000, what was the cost of goods manufactured?

Solution: $347,700

Working:

Cost of goods manufactured = $349,000 + $116,000 – $117,300 = $347,700

 

4) If the conversion cost is $84 per unit, the prime cost is $55 and the manufacturing cost per unit is $105, what is the direct materials cost per unit

Solution: $21

Working:

Prime cost = Direct materials + Direct labor

$55 = Direct materials + Direct labor

Direct materials = $55 – Direct labor

Now,

Conversion cost = Direct labor + Overhead Overhead

$84 = Conversion cost = Direct labor + Overhead Overhead

Overhead = $84 – Direct labor

As, Product cost = ($55 – Direct labor) + Direct labor + ($84 – Direct labor) = $105

or, Direct labor = $34

Direct materials + Direct labor = $55

Inputting values, we get Direct materials + $34 = $55

Direct materials = $21

 

5) Total manufactureing costs for August were $412,000. Prime cost was $64,000 and beginning WIP was $76,000. The costs of goods manufactured was $434,000. Calculate the cost of overhead for August and the cost of WIP

Solution: $348,000 and $54,000

Working:

Cost of goods manufactured = Total manufacturing costs + BWIP – EWIP

$434,000 = $412,000 + $76,000 – EWIP

EWIP = $54,000

Total manufacturing costs = Prime cost + Overhead

$412,000 = $64,000 + Overhead

Overhead = $348,000

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