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Chapter

ECO206Y1 Chapter Notes -Finished Good, Scott Paper Company, Income Statement


Department
Economics
Course Code
ECO206Y1
Professor
Loren Brandt

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1
RSM222 Winter 2014
Solutions for Self-Study Questions

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Exercise 2-10
1.
Eccles Company
Schedule of Cost of Goods Manufactured
For the year ended xxx
Direct materials:
Raw materials inventory, beginning ..............
$ 8,000
Add: Purchases of raw materials ..................
132,000
Raw materials available for use ....................
140,000
Deduct: Raw materials inventory, ending .....
10,000
Raw materials used in production ................
$130,000
Direct labour .................................................
90,000
Manufacturing overhead:
Rent, factory building ..................................
$ 80,000
Indirect labour ............................................
56,300
Utilities, factory ...........................................
9,000
Maintenance, factory equipment ..................
24,000
Supplies, factory .........................................
700
Depreciation, factory equipment ..................
40,000
Total manufacturing overhead costs .............
210,000
Total manufacturing costs ..............................
430,000
Add: Work in process, beginning ....................
5,000
435,000
Deduct: Work in process, ending ....................
20,000
Cost of goods manufactured ..........................
$415,000
2. The cost of goods sold section would be:
Finished goods inventory, beginning ...............
$ 70,000
Add: Cost of goods manufactured ..................
415,000
Goods available for sale .................................
485,000
Deduct: Finished goods inventory, ending .......
25,000
Cost of goods sold .........................................
$460,000

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Problem 2-26
1.
Direct materials:
Raw materials inventory, beginning ................
$ 20,000
Add: Purchases of raw materials ....................
160,000
Raw materials available for use ......................
180,000
Deduct: Raw materials inventory, ending .......
10,000
Raw materials used in production ..................
$170,000
Direct labour ...................................................
80,000
Manufacturing overhead:
Indirect labour ..............................................
60,000
Building rent (80% × $50,000) .....................
40,000
Utilities, factory .............................................
35,000
Royalty on patent
($1 per unit × 30,000 units) ......................
30,000
Maintenance, factory .....................................
25,000
Rent on equipment:
$6,000 + ($0.10 per unit × 30,000 units) ...
9,000
Other factory overhead costs .........................
11,000
Total overhead costs .......................................
210,000
Total manufacturing costs ................................
460,000
Add: Work in process inventory, beginning .......
30,000
490,000
Deduct: Work in process inventory, ending .......
40,000
Cost of goods manufactured ............................
$450,000
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