Davis Manufacturing Company had the following data:?? January 1 December 31 Accounts receivable $ 27 , 000 $ 33 , 000 Materials inventory 22 , 500 6 , 000 Work in process inventory 70 , 200 48 , 000 Finished goods inventory 3 , 000 15 , 000 \begin{array}{lrr} & ext { January } 1 & ext { December } 31\ ext { Accounts receivable } & \$ 27,000 & \$ 33,000 \ ext { Materials inventory } & 22,500 & 6,000 \ ext { Work in process inventory } & 70,200 & 48,000 \ ext { Finished goods inventory } & 3,000 & 15,000\end{array} Accounts receivable Materials inventory Work in process inventory Finished goods inventory January 1 $27 , 000 22 , 500 70 , 200 3 , 000 December 31 $33 , 000 6 , 000 48 , 000 15 , 000 Collections on account were $625,000.Cost of goods sold was 68% of sales.Direct materials purchased amounted to $90,000.Factory overhead was 300% of the cost of direct labor.Compute:(a)Sales revenue(all sales were on account)(b)Cost of goods sold(c)Cost of goods manufactured(d)Direct materials used(e)Direct labor incurred(f)Factory overhead incurred

Question

Davis Manufacturing Company had the following data:??    January  1  December  31  Accounts receivable  $ 27 , 000 $ 33 , 000  Materials inventory  22 , 500 6 , 000  Work in process inventory  70 , 200 48 , 000  Finished goods inventory  3 , 000 15 , 000 \begin{array}{lrr} & 	ext { January } 1 & 	ext { December } 31\	ext { Accounts receivable }  &  \$ 27,000  &  \$ 33,000 \	ext { Materials inventory }  &  22,500  &  6,000 \	ext { Work in process inventory }  &  70,200  &  48,000 \	ext { Finished goods inventory }  &  3,000  &  15,000\end{array}  Accounts receivable   Materials inventory   Work in process inventory   Finished goods inventory  ​  January  1 $27 , 000 22 , 500 70 , 200 3 , 000 ​  December  31 $33 , 000 6 , 000 48 , 000 15 , 000 ​   Collections on account were $625,000.Cost of goods sold was 68% of sales.Direct materials purchased amounted to $90,000.Factory overhead was 300% of the cost of direct labor.Compute:(a)Sales revenue(all sales were on account)(b)Cost of goods sold(c)Cost of goods manufactured(d)Direct materials used(e)Direct labor incurred(f)Factory overhead incurred

Jessica Modesto · Accepted Answer

Final Answer : ​(a)Sales Revenue = $33,000 + $625,000 - $27,000 = $631,000(b)Cost of Goods Sold = $631,000 × 0.68 = $429,080(c)Cost of Goods Manufactured = $15,000 + $429,080 - $3,000 = $441,080(d)Direct Materials Used = $22,500 + $90,000 - $6,000 = $106,500(e)Direct Labor Incurred = $441,080 + $48,000 - $70,200 = $418,880Total Manufacturing Costs Added$418,880 - $106,500 = $312,380$312,380 = Factory Overhead + Direct LaborLet X = Direct Labor3X + X = $312,3804X = $312,380Direct Labor = $78,095(f)Factory Overhead Incurred = $78,095 × 3 = $234,285

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