Calculate cost for a manufacturer, no inventories
The following data pertains to the Anderson table mfg company for Jan. 2003
the company made 1000 tables durning Jan, and there are no beginning or ending inventories.
wood used in production 25000 $25,000
cleaning supplies $ 300.00
machine lubricants used in the factory $ 100.00
factory rent $ 2,000.00
rent on the sales office $ 3,000.00
Sales Salaries $ 20,000.00
production line labor cost $ 50,000.00
plant security guard $ 1,200.00
plant supervision $ 2,500.00
sales office supervision $ 3,000.00
Depereciation on production equipement $ 4,000.00
Depereciation on sales office equipment $ 1,000.00
$112,100
Required
what was the cost of direct material used in production durning Jan 2003 ?
what is the cost of direct labor for Jan 2003 ?
what is the cost for Manufacturing overhead for Jan 2003 ?
what is the total cost of tables manufractured in Jan 2003 ?
whatis the cost of each table manufactured in Jan 2003 ?
Do you think the cost per table is valuable information for Carole Anderson, the
companys owner?
How might she use this information
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INVENTORY AND PRODUCTION COST INCLUDING COST OF GOODS
MANUFACTURED AND COST OF GOODS SOLD
The following data pertain to the Elsea MFG company for the year ended Dec 31, 2004
The company made 60,000 SW20 switching units durning 2004
Beging direct material inventory $ 42,000.00
Ending direct material inventory $ 48,000.00
beginning work in process inventory $ 84,000.00
Ending work in process inventory $ 93,000.00
Beginning finished goods inventory $ 124,000.00
Ending finished goods inventory $ 133,000.00
Direct materials purchased $ 850,000.00
indirect materials used in production $ 4,000.00
Factory supplies used $ 6,200.00
Deprecation on the factory $ 60,000.00
Deprecation on sales office $ 4,000.00
Deprecation on the administrative office $ 3,000.00
Sales Salaries $ 120,000.00
Assembly line labor cost $ 820,000.00
Factory security guard cost $ 12,000.00
Factory supervision $ 82,600.00
Depreciation on production equipment $ 560,000.00
Depreciation on sales office equipment $ 22,200.00
Required
what was the cost of direct material used in production durning Jan 2004 ?
what is the cost of direct labor for Jan 2004 ?
what is the cost for Manufacturing overhead for Jan 2004 ?
what is the total manufracturing cost incurred durning 2004 ?
what is the cost of goods manufractured for 2004 ?
what is the cost of goods sold for 2004 ?
For the Anderson table mfg company for Jan. 2003:
1. Cost of direct material used in production during Jan 2003: $25,000
2. Cost of direct labor for Jan 2003: $50,000
3. Cost for Manufacturing overhead for Jan 2003: $37,100 (This is the sum of machine lubricants, factory rent, rent on the sales office, Sales Salaries, plant security guard, plant supervision, sales office supervision, Depreciation on production equipment, and Depreciation on sales office equipment.)
4. Total cost of tables manufactured in Jan 2003: $112,100 (This is the sum of direct material cost, direct labor cost, and manufacturing overhead cost.)
5. Cost of each table manufactured in Jan 2003: $112.10 (This is the total cost of tables manufactured divided by the number of tables manufactured, which is 1000 in this case.)
As for Carole Anderson, the company's owner, the cost per table can be valuable information for various reasons:
- It enables her to determine the profitability of each table sold by comparing it to the selling price.
- It provides insights into the costs incurred during the manufacturing process and allows her to identify areas for cost reduction or efficiency improvement.
- It helps in making informed pricing decisions and setting competitive prices in the market.
For the Elsea MFG company for the year ended Dec 31, 2004:
1. Cost of direct material used in production during 2004: $850,000 (This is the sum of direct materials purchased minus the difference in beginning and ending direct material inventory.)
2. Cost of direct labor for 2004: $820,000 (This is the assembly line labor cost.)
3. Cost for Manufacturing overhead for 2004: $726,800 (This is the sum of indirect materials used in production, factory supplies used, Depreciation on the factory, Depreciation on sales office, and Depreciation on the administrative office.)
4. Total manufacturing cost incurred during 2004: $2,396,000 (This is the sum of direct material cost, direct labor cost, and manufacturing overhead cost.)
5. Cost of goods manufactured for 2004: $1,928,000 (This is the total manufacturing cost incurred minus the difference in beginning and ending work in process inventory.)
6. Cost of goods sold for 2004: $1,915,000 (This is the total cost of goods manufactured minus the difference in beginning and ending finished goods inventory.)
To calculate the various costs for the manufacturer, we need to understand the components that contribute to each cost category.
1. Cost of Direct Material Used in Production:
For both scenarios, the cost of direct material used in production can be calculated by subtracting the ending direct material inventory from the beginning direct material inventory and adding the direct materials purchased during the respective period.
Jan 2003 Calculation: Beginning Direct Material Inventory + Direct Materials Purchased - Ending Direct Material Inventory
Jan 2004 Calculation: Beginning Direct Material Inventory + Direct Materials Purchased - Ending Direct Material Inventory
2. Cost of Direct Labor:
This cost refers to the wages and benefits paid to the employees directly involved in the production process. To calculate the cost of direct labor for each period:
Jan 2003 Calculation: $50,000.00
Jan 2004 Calculation: $820,000.00
3. Cost of Manufacturing Overhead:
Manufacturing overhead includes all indirect costs associated with the production process. It encompasses items like factory rent, machine lubricants, factory security, factory supervision, factory supplies, and machine depreciation. To calculate manufacturing overhead for each period:
Jan 2003 Calculation: Sum of the given manufacturing overhead items
Jan 2004 Calculation: Sum of the given manufacturing overhead items
4. Total Cost of Tables Manufactured:
To determine the total cost of tables manufactured in each period, you need to add the cost of direct material used in production, the cost of direct labor, and the cost of manufacturing overhead.
Jan 2003 Calculation: Cost of Direct Material Used in Production + Cost of Direct Labor + Cost of Manufacturing Overhead
Jan 2004 Calculation: Cost of Direct Material Used in Production + Cost of Direct Labor + Cost of Manufacturing Overhead
5. Cost per Table Manufactured:
To find the cost per table manufactured, divide the total cost of tables manufactured by the number of tables produced:
Jan 2003 Calculation: Total Cost of Tables Manufactured / Number of Tables Produced (1000 tables)
Jan 2004 Calculation: Total Cost of Tables Manufactured / Number of Tables Produced (60,000 units)
6. Cost of Goods Manufactured:
The cost of goods manufactured measures the total cost of the tables produced during a specific period. It includes the cost of direct material used in production, the cost of direct labor, and the cost of manufacturing overhead.
Jan 2004 Calculation: Cost of Direct Material Used in Production + Cost of Direct Labor + Cost of Manufacturing Overhead
7. Cost of Goods Sold:
The cost of goods sold refers to the cost associated with the products that have been sold during a specific period. It can be calculated by subtracting the ending finished goods inventory from the sum of the beginning finished goods inventory and the cost of goods manufactured.
Jan 2004 Calculation: Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory
Regarding the question about the value of cost per table for Carole Anderson, the company's owner, it can provide her with information about the profitability of each table produced. She can analyze the cost per table and use it to determine the appropriate pricing strategy, evaluate the efficiency of production processes, and make informed decisions about cost control measures.
For the second scenario, use the given data and apply the calculations described above to find the answers to the specific questions about Jan 2004 and the year-end figures for 2004.