(WIP) ACC 350 Exam 1 Study Material

12.7-18
am
InClass Problems – Chapter 2
#2 – COGM / COGS
Hanks Corporation produced 120,000 toy pianos last year. These pianos sell for $100 each.
Hanks had 11,350 pianos in finished goods inventory at the beginning of the year. At the end of
the year, there were 7,600 pianos in finished goods inventory. Hanks uses FIFO method of
accounting and the accounting records from last year show the following information
a. Purchases of Raw Materials $900,000
b. Rent on the factory building 250,000 OH
c. Utilities (50% factory, 50% sales office) 60,000 ½ OH ½ S&A
d. Insurance on the factory 10,000 OH
e. Depreciation, factory equipment 70,000 OH
f. General Administration 175,000 S&A
g. Raw Materials used as supplies 35,000 OH
h. Plant receptionist, Plant landscaping, etc. 100,000 OH
i. Salaries
Direct labor
$2,500,000 DL
Factory Supervisors
500,000 OH
Plant Manager
90,000 OH
Plant Controller
40,000 OH
Receiving personnel
60,000 OH
Quality Inspectors
150,000 OH
Salespeople
300,000 S&A
Machine Maintenance salary
100,000 OH
RM Inventory manager
40,000 OH
Total Salaries $3,780,000
Raw Materials Inventory, January 1 $310,000
Raw Materials Inventory, December 31 100,000
Work In Process Inventory, January 1 450,000
Work In Process Inventory, December 31 600,000
Finished Goods Inventory, January 1 454,000
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