AC505 wk 8 final exam tutorial

1.

Problem:
Sales	$31,800
Purchases of direct materials	7,000
Direct labor	5,000
Work in process inventory, 1/1	800
Work in process inventory, 12/31	3,000
Finished goods inventory, 1/1	4,000
Finished goods inventory, 12/31	5,300
Accounts payable, 1/1	1,700
Accounts payable, 12/31	1,500
Direct materials inventory, 1/1	6,000
Direct materials inventory, 12/31	1,000
Indirect labor	600
Indirect materials used	500
Utilities expense, factory	1,900
Depreciation on factory equipment	3,500
Gross Margin  _________________
Solution:
Gross Margin
Pacific States Manufacturing
For year ended 12/31
(all amounts are in thousands ($000)
Sales			$31,800
Less Cost of Goods Sold
Direct materials inventory 1/1		6,000
Purchases of direct materials		7,000
Total raw materials needs		13,000
Less Direct materials inventory, 12/31		1,000
Raw materials to be purchased		12,000
Direct labor		5,000
Factory Overhead:
Indirect materials used	500
Indirect labor	600
Utilities expense, factory	1,900
Depreciation on factory equipment	3,500
Total Manufacturing Overhead		6500
Total manufacturing cost		23,500
add Beginning work in process invty 1/1		800
less Ending work in process invty 12/31		-3,000
Cost of Goods Manufactured		21,300
add Beginning finished goods invty 1/1		4,000
Total goods available for sale		25,300
Less Ending finished goods invty 12/31		5,300
Cost of Goods Sold			20,000
Gross Margin			$11,800
			excel