Accounting exercises

hho9e_p16_27a_eip_stud.xlsx

P16-27A

Accounting, 9e
P16-27A	Flow of costs through a manufacturer's inventory accounts
LO 6 [20-25 minutes]
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Root Shoe Company makes loafers. During the most recent year, Root incurred total
manufacturing costs of $26,400,000. Of this amount, $2,100,000 was direct materials
used and $19,800,000 was direct labor. Beginning balances for the year were
Direct materials inventory, $600,000; Work in process inventory, $800,000; and
Finished goods inventory, $700,000. At the end of the year, inventory accounts
showed these amounts:
Materials	Direct Labor	Manufacturing Overhead
Direct materials inventory	$ 900,000	$ - 0	$ - 0
Work in process inventory	400,000	600,000	400,000
Finished goods inventory	800,000	150,000	40,000
Requirements
1.	Compute Root Shoe Company’s cost of goods manufactured for the year.
2.	Compute Root’s cost of goods sold for the year.
3.	Compute the cost of materials purchased during the year.
Test Your Knowledge
P16-27A
Req. 1
Work in Process inventory
Beginning inventory	$ 800,000
Plus: Direct materials used
Plus: Direct labor
Plus: Manufacturing overhead
Total manufacturing costs incurred during the year
Total manufacturing costs to account for
Less: Ending inventory
Cost of goods manufactured	$ - 0	*
Finished goods inventory
Beginning inventory	$ 700,000
Plus: Cost of goods manufactured	- 0	*
Cost of goods available for sale	700,000
Less: Ending inventory
Cost of goods sold	700,000

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