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10 April, 09:48

Taylor Industries had a fire and some of its accounting records were destroyed. Available information is presented below for the year ended December 31. Materials inventory, December 31 $ 15,000 Direct materials purchased 28,000 Direct materials used 22,900 Cost of goods manufactured 135,000 Additional information: Factory overhead is 150% of direct labor cost. Finished goods inventory decreased by $18,000 during the year. Work in process inventory increased by $12,000 during the year. Calculate: (a) Materials inventory, January 1 (b) Direct labor cost (c) Factory overhead incurred (d) Cost of goods sold

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  1. 10 April, 09:58
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    Materials inventory, 1st December $ 9,900

    Direct Labor = $ 40,040

    Factory Overhead = $ 60,060

    Cost of goods sold $ 117,000

    Explanation:

    Materials inventory, 1st December $ 9,900

    Direct materials purchased 28,000

    Materials inventory, December 31 $ 15,000

    Direct materials used 22,900

    Direct Labor $ 40,040

    Factory Overhead $ 60,060

    Conversion Costs $ 100,100

    Total Manufacturing Costs $123,000

    Work in process inventory increased by $12,000

    Cost of goods manufactured 135,000

    Finished goods inventory decreased by $18,000

    Cost of goods sold $ 117,000

    Working

    Conversion Costs = Direct Labor + Factory Overhead

    100,100 = 100 % + 150%

    100,100 = 100x + 150x

    100,100 = 250 x

    x = 100,100/250

    x = 400.4

    Direct Labor = 100% * 400.4 = $ 40,040

    Factory Overhead = 150% * 400.4 = $ 60,060
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