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Part 2: The following information has been taken from the cost records of Wilson Production, Inc., for the past year:
Raw material used in production $326
Total manufacturing costs charged to production during the year (includes direct material, direct labor, and overhead equal to 60% of direct labor cost) 686
Cost of goods available for sale 826
Selling and Administrative expenses 25
Inventories Beginning Ending
Raw Material $75 $ 85
Work in Process 80 30
Finished Goods 90 110
Answer the following questions. Show your work
a. The cost of raw material purchased during the year was
b. Direct labor cost charged to production during the year was
a. The cost of raw materials purchased during the year:
The problem states that $326 worth of raw materials were used in production, so we know that the total amount of raw materials purchased will be $326 plus or minus the change in raw materials inventory.
Since Raw Material Beginning Inventory was $75 and Ending Raw Material Inventory was $85, then we know that Raw Material Inventory increased by $10. This means that $10 worth of inventory was purchased but not used in production. Since $326 worth of inventory was used in production and $10 was bought but not used in production, ...
The solution fills in the blanks in the cost accounting of Wilson Production.