Question

Tyge Corporation recorded the following activities during its first month of operations. Purchased materials costing $300,000.

Answer 1

Answer:

Adjusted Cost of Goods Sold $ 610,000

Net Profit $ 160,000

Ending Inventory Materials   $ 20,000

Ending Inventory  Finished Goods $ 55,000

Ending Inventory Work In Process  $ 168,750

Explanation:

Tyge Corporation

Cost of Goods Sold Schedule

Direct Materials Inventory $ 000000

Purchased materials  $300,000

Less Ending Inventory $ 20,000

Direct materials Used in production $280,000.

Direct labor costs of $220,000,

Applied manufacturing overhead at a rate of $25 per direct labor hour. (Direct labor workers earn $16 per hour). $343,750

(Working 220,000/16*25= 343,750)

Total Manufacturing Costs 843,750

Add Work in Process Beginning Inventory $ 0000

Cost of Goods Available For Manufacture $ 843,750

Less Work In Process Ending Inventory 168,750

Cost Of Goods Manufactured $ 675,000

Add Finished Goods Opening Inventory  $0000

Cost of Goods Available for Sale $ 675,000

Less Finished Goods Ending Inventory $55,000

Cost of Goods Sold $620,000

LEss Over applied overhead 10,000

Adjusted Cost of Goods Sold $ 610,000

Tyge Corporation

Income Statement

Sales $900,000

Less Adjusted Cost of Goods Sold  $ 610,000

Gross Profit $ 290,000

Less selling and administrative Costs  $130,000

Net Profit $ 160,000

Part B: It is assumed that the beginning inventories of Direct Materials , Work in Process and  Finished Goods  are zero.

So adding the given balances and subtracting  we get the ending Inventories .

Materials Purchased $300,00

Materials used $ 280,000

Ending Inventory Materials   $ 20,000

Finished Goods  Transferred 675,000

Cost of Goods Sold 620,000

Ending Inventory  Finished Goods $ 55,000

Total Manufacturing Costs 843,750

Cost Of Goods Manufactured $ 675,000

Ending Inventory Work In Process  $ 168,750