Part Two (COGS and COGM: Two products) In its second year of operations, Memorie
ID: 2508620 • Letter: P
Question
Part Two (COGS and COGM: Two products) In its second year of operations, Memories, Inc. has decided to expand the product e by producing replicas of historic buildings. These replicas will require the purchase new building molds at a cost of $.18 per replica. Of course, new doll molds will not be equired. All other materials and prices will remain the same. The replicas require additional processing time because of the details on the uildings that limits production to 18 replicas per hour per assembly line. The replicas are not expected to affect the sales of dolls. In the second year of operations, MI xpects to produce and sell about 352,800 dolls and 25,200 replicas. Increasing production is expected to increase overhead costs by 5% in Year 2. irect labor costs per hour are not expected to change, but the number of labor hours is stimated to be 94,500. The costs of product promotion and advertising are expected to crease to $3,000 per month. All other selling and administrative costs are expected to emain the same as in Year 1 Actual production in Year 2 was 345,132 dolls and 25,200 replicas. Direct material osts transferred to Work-in-Process were $259,000 for dolls and $15,624 for replicas. irect labor costs were $862,830 for the dolls and $70,010 for replicas, representing 6,283 and 7,001 direct labor hours, respectively. Actual overhead costs were 203,600.Explanation / Answer
Prepare the cost of goods manufactured schedule as follows:
Schedule of Cost of Goods Manufactured Particulars Dolls Replicas Total Direct material: Beginning raw material inventory balance $1,973 Add: Purchases during the year $276,138 Direct raw materials available $278,111 Less: Ending raw material inventory balances ($3,487) Direct raw materials used in production $259,000 $15,624 $274,624 Direct labor $862,830 $70,010 $932,840 Actual overhead costs: ($203,600 × 86,283 ÷ 93,284) $188,320 $188,320 ($203,600 × 7,001 ÷ 93,284) $15,280 $15,280 Total manufacturing costs $1,310,150 $100,914 $1,411,064 Add: Work-in-process - Beginning balance $0 $0 $0 $1,310,150 $100,914 $1,411,064 Less: Work-in-process - Ending balance $0 $0 $0 Cost of goods manufactured $1,310,150 $100,914 $1,411,064