Selected data concerning operations of Cascade Manufacturing Company for the past fiscal year follow: Raw materials used $300,000

Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs) 681,000

Cost of goods available for sale 826,000

Selling and general expenses 30,000

Beginning Inventories

Raw materials $70,000

Work-in-process 85,000

Finished goods 90,000

Ending Inventories

Raw materials $80,000

Work-in-process 30,000

Finished goods 110,000

Determine each of the following:

a. Cost of raw materials purchased

b. Direct labor costs charged to production

c. Cost of goods manufactured

d. Cost of goods sold

a.   Purchases $310,000

b.     Direct labor  $ 238,125

c. Cost of goods manufactured $ 736,000

d. Cost of goods sold $ 716,000

Explanation:

Cascade Manufacturing Company

Raw materials used $300,000

Add Raw materials Ending   $80,000

Less Raw materials  Beginning $70,000

a.   Purchases $310,000

Add Raw materials Ending to Raw materials used and subtract  Raw materials  Beginning to get  Raw materials  Purchases.

Total manufacturing costs $  681,000

Less Raw materials used $300,000

Conversion Costs  $ 381,000

Conversion Costs = Direct Labor + Factory Overhead

$ 381,000=  x + 0.6 x

$ 381,000= 1.6x

b.   x=  Direct labor = $ 381,000/1.6=  $ 238,125

Factory Overhead= 0.6 *$ 238,125= $ 142875

Find Conversion Costs and then apply the ratio to get the direct labor costs.

c.

Cascade Manufacturing Company

Cost of goods manufactured

Raw materials  Beginning $70,000

Add Purchases $310,000

Less Raw materials Ending   $80,000

Raw materials used $300,000

Add Direct labor   $ 238,125

Factory Overhead $ 142875

Total manufacturing costs $  681,000

Add Work-in-process Beginning 85,000

Cost of goods available for manufacture $ 766,000

Less Work-in-process Ending 30,000

Cost of goods manufactured $ 736,000

Add and subtract as above to get the Cost of goods manufactured.

d.  Cascade Manufacturing Company

Cost of goods sold

Raw materials  Beginning $70,000

Add Purchases $310,000

Less Raw materials Ending   $80,000

Raw materials used $300,000

Add Direct labor   $ 238,125

Factory Overhead $ 142875

Total manufacturing costs $  681,000

Add Work-in-process Beginning 85,000

Cost of goods available for manufacture $ 766,000

Less Work-in-process Ending 30,000

Cost of goods manufactured $ 736,000

Add Finished goods Beginning 90,000

Cost of goods available for sale  $ 826,000

Less Finished goods Ending 110,000

Cost of goods sold $ 716,000

Add and subtract as above to get the Cost of goods sold.

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