Midterm Exam

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1. Question : (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larden Corporation for the just-completed year.

Sales
$950

Purchases of raw materials
$170

Direct labor
$210

Manufacturing overhead
$220

Administrative expenses
$180

Selling expenses
$140

Raw materials inventory, beginning
$70

Raw materials inventory, ending
$80

Work-in-process inventory, beginning
$30

Work-in-process inventory, ending
$20

Finished goods inventory, beginning
$100

Finished goods inventory, ending
$70

Required: Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.

Student Answer: Schedule of Cost of Goods Manufactured for the Larden Corporation. Beginning Raw Materials Inventory $70 Add: Purchases of Raw Materials $170 Raw materials available for use= $240 Deduct:Ending Raw Materials Inventory $80 Raw Materials used in Production=$160 Direct Labor $210 Manufacturing Overhead $220 Total Manufacturing Costs $590 Add:Beginning Work in Process Inventory $30+$590=$620 Deduct:Ending Work in Process Inventory$20 COST OF GOODS MANUFACTURED=$600 Instructor Explanation: Schedule of Cost of Goods Manufactured for the Larden Corp.

Direct materials:

Beginning raw materials inventory $70
Add: purchases raw material 170
Raw materials available for use 240
Deduct ending raw materials 80
Raw materials used in production 160
Direct labor 210
Manufacturing overhead 220
Total manufacturing costs 590
Add beginning work-in-process inventory 30
620 Deduct ending work-in-process inventory 20
Cost Of goods manufactured 600

Points Received: (not graded)
Comments:

2. Question : (TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed Units Materials Conversion Work in process, June 1 150,000 75% 55% Work in process, Jun 30 145,000 85% 75%

The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

Student Answer: Equivalent Units Materials Conversion Units transferred to the dept.: 480,000 480,000 Ending Work in Process: Materials=(145,000*85%) 123,250 Conversion=(145,000*75%) 108,750 Equivalent Units of Products 603,250 588,750 Instructor Explanation: Equivalent Units Materials Conversion Units transferred to the next department 480,000 480,000 Ending work in process:

Materials 145,000 x 85% 123,250 Conversion 145,000 x 75% 108,750 Equivalent units of production 603,250 588,750

Points Received: (not graded)
Comments:

3. Question : (TCO B) Drake Company's income statement for the most recent year appears below.

Sales (45,000 units) $1,350,000

Less: variable expenses...
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