FINANCE

6. Given the following information for a​ retailer, compute the cost of goods sold.

Calculation of Cost of Goods Sold  
Cost of goods sold:  
     
Plus:      
     
     
     
Less:      
Cost of goods sold    

7. Erickson Industries is calculating its Cost of Goods Manufactured at​ year-end. Erickson’s

accounting records show the​ following: The Raw Materials Inventory account had a beginning balance of $ 12,000 and an ending balance of $ 20,000. During the​ year, the company purchased $ 62,000 of direct materials. Direct labor for the year totaled

$ 127,000​, while manufacturing overhead amounted to $ 156 ,000. The Work in Process Inventory account had a beginning balance of $ 23,000 and an ending balance of $ 19,000. Assume that Raw Materials Inventory contains only direct materials. Compute the Cost of Goods Manufactured for the year. (Hint​: The first step is to calculate the direct materials used during the​ year.)

Start by calculating the direct materials used during the year.

Erickson Industries
Calculation of Direct Materials Used
For Current Year

Erickson

Industries is calculating its Cost of Goods Manufactured at​ year-end.

Erickson’s

accounting records show the​ following: The Raw Materials Inventory account had a beginning balance of

$ 12 comma 000

and an ending balance of

$ 20 comma 000

.

During the​ year, the company purchased

$ 62 comma 000

of direct materials. Direct labor for the year totaled

$ 127 comma 000

​,

while manufacturing overhead amounted to

$ 156 comma 000

.

The Work in Process Inventory account had a beginning balance of

$ 23 comma 000

and an ending balance of

$ 19 comma 000

.

Assume that Raw Materials Inventory contains only direct materials. Compute the Cost of Goods Manufactured for the year.

​(Hint​:

The first step is to calculate the direct materials used during the​ year.)

Start by calculating the direct materials used during the year.

Erickson Industries
Calculation of Direct Materials Used
For Current Year
   
Plus:    
   
Less:    
Direct materials used  

Compute the Cost of Goods Manufactured for the year.

Erickson Industries
Calculation of Cost of Goods Manufactured
For Current Year
   
Plus: Manufacturing costs incurred  
     
     
     
   
Less:    
Cost of goods manufactured  

8. Suppose the smartphone manufacturer Orange Electronics provides the following information for its costs last month​ (in millions):

 

Requirements​ 1, 2 and 3. Classify each of these costs according to its place in the value chain. Within the production​ category, break the costs down further into three​ subcategories: Direct​ Materials, Direct​ Labor, and Manufacturing Overhead. Then calculate the total cost for each value chain category. ​(Enter amounts in millions. If a box is not used in the​ table, leave the box​ empty; do not enter a​ zero.)

Orange Electronics
Value Chain Cost Classification
      Production      
Cost R and D Design Direct Materials Direct Labor Manufacturing Overhead Marketing Distribution Customer Service
Delivery expense                
Salaries of salespeople                
Chipset                
Exterior case for phone                
Assembly-line workers’                
wages                
Technical support hotline              
Depreciation on plant                
and equipment                
Rearrange production                
process                
1-800 (toll-free) line for                
customer orders                
Scientists’ salaries                
Total costs                
  Production    
Cost R and D Design Direct Materials Direct Labor Manufacturing Overhead Marketing Distribution Customer Service

Requirement 4. How much are the total product​ costs?

First determine the​ formula, then calculate the total product costs. ​(Enter amounts in​ millions.)

______________________ + __________________ + = Total product cost

___________________ + _____________________ + ____________________ = __________________

Requirement 5. How much are the total prime​ costs?

First determine the​ formula, then calculate the total prime costs. ​(Enter amounts in​ millions.)

    +   = Total prime cost
  +   =  

Requirement 6. How much are the total conversion​ costs?

First determine the​ formula, then calculate the total conversion costs. ​(Enter amounts in​ millions.)

    +   = Total conversion cost
  +   =  

9. Compute the Cost of Goods Manufactured and Cost of Goods Sold for East Aquatic Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials.

Start the calculation for cost of goods manufactured by calculating the direct materials used.

East Aquatic Company
Calculation of Direct Materials Used
For Current Year
 
Plus:  
     
Less:    
Direct materials used  

Calculate the cost of goods manufactured.

East Aquatic Company
Calculation of Cost of Goods Manufactured
For Current Year
   
Plus: Manufacturing costs incurred
     
   
   
   
Less:    
Cost of goods manufactured  

Now calculate the cost of goods sold.

East Aquatic Company
Calculation of Cost of Goods Sold
For Current Year
   
Plus:    
   
Less:    
Cost of goods sold  

10. Harnum Manufacturing found the following information in its accounting​ records: $ 513,500 of direct materials​ used, $ 223,500

of direct​ labor, and $ 773,175 of manufacturing overhead. The Work in Process Inventory account had a beginning balance of $ 81,300 and an ending balance of $ 91,250. Compute the​ company’s Cost of Goods Manufactured.

Complete the following table to determine the cost of goods manufactured.

Harnum Manufacturing
Calculation of Cost of Goods Manufactured
For Current Year
   
Plus: Manufacturing costs incurred  
     
     
     
   
Less:    
   

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