Question

Manufacturing costs for Davenport Company during 2018 were as follows: Beginning Finished Goods, 1/1/18 $ 24,400 Beginning Raw Materials, 1/1/18 35,800 Beginning Work in Process, 1/1/18 110,600 Direct Labor for 2018 275,600 Ending Finished Goods, 12/31/18 22,700 Ending Raw Materials, 12/31/18 40,400 Ending Work in Process, 12/31/18 120,900 Material Purchases for 2018 304,500 (including $16,500 of indirect material) Required:
1. Compute direct material used. 2. Compute applied overhead if the company applies overhead at a rate of 0.78 (78%) of direct labor cost. 3. Compute total manufacturing cost. 4. Compute cost of goods manufactured. 5. Compute cost of goods sold.

Answer 1

Answer:

1. $283,400

2. $214,968

3. $790,468

4. $780,168

5. $781,868

Explanation:

Material used = Beginning Materials + Purchases - Ending Materials

                       = $35,800 + $304,500 - $40,400

                       = $299,900

Then,

Direct Materials Used = Total Materials Used - Indirect Material

                                     = $299,900 - $16,500

                                     = $283,400

Applied overhead = Application Rate × Actual Activity        

                               =  78% ×  $275,600

                               =  $214,968

Calculation of Total Manufacturing Costs

Direct Materials                         $283,400

Direct Labor                               $275,600

Overheads Applied                    $214,968

Indirect Materials                          $16,500

Total Manufacturing Costs        $790,468

Cost of Goods Manufactured = Beginning Work in Process Inventory + Manufacturing Costs - Ending Work in Process Inventory

                                                  = $110,600 + $790,468 - $120,900

                                                  = $780,168

Cost of goods sold = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory    

                                =  $ 24,400 +  $780,168 -  $22,700    

                                = $781,868