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(WIP) ACC 350 Exam 1 Study Material

Work in Process

12.7-18 am InClass

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 2 - 15

P . soft 7-19 InClass Problems – Chapter 2 Required: a. Prepare a Cost of Goods Manufactured Statement. Beginning RM Inventory $310,000 + Raw Material Purchases 900,000 = RM Available for Use $1,210,000 - RM used as supplies 35,000 - Ending RM Inventory 100,000 = DM Used in Production $1,075,000 + Direct Labor 2,500,000 + Manufacturing Overhead 1,475,000 = Total Manufacturing Cost $5,050,000 + Beginning WIP 450,000 - Ending WIP 600,000 = COGM $4,900,000 b. What was the cost of producing one toy piano last year? $4,900,000/120,000 = $40.83/unit c. Based on the COGM Statement, what is the value of ending FG inventory? $40.83 * 7,600 = $310,308 d. What was COGS? COGM $4,900,000 + Beginning FG 454,000 - Ending FG 310,308 = COGS $5,043,692 2 - 16