Practice Problem #1
The following data has been prepared for a manufacturer:
Beginning Inventory, Raw Materials, $15,000
Beginning Inventory, Work in Process, $18,000
Beginning Inventory, Finished Goods, $20,000
Ending Inventory, Raw Materials, $25,000
Ending Inventory, Work in Process, $29,000
Ending Inventory, Finished Goods, $35,000
Purchases of Raw Materials, $65,000
Indirect Materials, $6,000
Direct Labor, $62,000
Indirect Labor, $9,000
Depreciation Expense for Production Equipment, $9,000
Other Factory Overhead Costs, $3,000
Total number of units produced during the year, 76,000
Required: Complete a schedule of cost of goods manufactured and compute the cost per unit for each unit produced.
Solution
Schedule of cost of goods manufactured
| Beginning work in process inventory |
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|
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| 18,000 |
|---|
| Direct materials used: |
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|
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|
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|
|---|
| Beginning Raw Materials Inventory | 15,000 |
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|
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|
|---|
| Purchases of Raw Materials | 65,000 |
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|
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|
|---|
| Raw Materials Available for Use | 80,000 |
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|
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|
|---|
| Ending Raw Materials Inventory | 25,000 |
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|
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|
|---|
| Direct Materials Used |
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| 55,000 |
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|
|---|
| Direct Labor |
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| 62,000 |
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|
|---|
| Factory Overhead |
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|
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|
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|
|---|
| Indirect Materials | 6,000 |
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|
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|
|---|
| Indirect Labor | 9,000 |
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|
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|
|---|
| Depreciation production equipment | 9,000 |
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|
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|
|---|
| Other factory overhead costs | 3,000 |
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|
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|
|---|
| Total Factory Overhead Costs |
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| 27,000 |
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|
|---|
| Total Manufacturing Costs |
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|
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| 144,000 |
|---|
| Total Manufacturing Costs to Account For |
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|
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| 162,000 |
|---|
| Ending Work in Process Inventory |
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|
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| 29,000 |
|---|
| Cost of Goods Manufactured |
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|
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| 133,000 |
|---|
Cost per unit = Cost of goods manufactured / total number of units produced
Cost per unit = $133,000 / 76,000
Cost per unit = $1.75
