I-17.03 Vintage Furniture constructs and sells executive style conference tables
ID: 2590594 • Letter: I
Question
I-17.03 Vintage Furniture constructs and sells executive style conference tables. The selling price is $10,000 per table. A unique feature is that the only raw material used in the construction of each table, other than indirect materials like glues and screws, comes entirely from a single tree. Tree prices and other costs of production have remained stable, and Vintage is able to use each tree purchased without incurring any significant spoilage. Consider the following"disorganized" information and complete the indicated requirements. Ending work in process (600 tables) Selling price per table Ending finished goods (200 tables) Indirect labor incurred during the period Raw materials transferred into production (700 trees) Beginning finished goods (400 tables) Cost of glues and screws Beginning work in process Ending raw materials (500 trees) Direct labor incurred during the period Selling, general, and administrative costs incurred Depreciation of factory equipment Raw material purchases during the period (900 trees) All other factory overhead Tables sold (800 tables) $1,800,00 10,000 1,400,000 125,000 700,000 2,800,00 35,000 1,465,000 500,000 3,300,00 1,150,000 75,000 900,000 300,000 (a) Complete the reconciliation of units on the accompanying blank worksheet, showing the "unit (b) (c) (d) activity in raw materials, work in process, and finished goods Calculate the cost of goods manufactured. Calculate the cost of goods sold. Calculate net income. Assume an income tax rate of 35%.Explanation / Answer
(a)
(b)
(c)
(d)
Inventory reconciliation Raw material reconciliation units Value Beginning raw material 300 300000 Purchase of raw material 900 900000 Raw maerial available for production 1200 1200000 Raw material transferred to production (A) 700 700000 Ending raw material inventory 500 500000 Work in process reconciliation units Beginning inventory of work in process 500 1465000 Production charged (C) 700 4535000 Total 1200 6000000 Ending work in process 600 1800000 Work in process transferred to finished goods 600 4200000 Finished goods reconciliation units Beginning finished goods 400 2800000 Transferred from work in process 600 4200000 Total finished goods available for sale 1000 7000000 Finished goods sold 800 5600000 Ending finished goods 200 1400000 Workings: Work in process charged Raw material issued for porduction (A) 700000 Direct labor incurred 3300000 Manufacturing overhead (B) 535000 Cost of manufacture (C) 4535000 Manufacturing overhead Indirect labor 125000 Cost of glues and screws 35000 Depreciation of factory equipment 75000 All other factory overhead 300000 Total manufacturing overhead (B) 535000