Reference no: EM132595535
LTC Company, a manufacturing firm, had the following inventory balances at the beginning and end of the current year.
Inventory Account:
Work-in-process inventory, 1 January 2019 : $ 288,000
Work-in-process inventory, 31 December 2019: $ 286,000
Raw materials inventory, 1 January 2019 : $ 150,000
Raw materials inventory, 31 December 2019: $ 158,000
Finished goods inventory, 1 January 2019: $ 370,000
Finished goods inventory, 31 December 2019 : 388,000
During the year, the company purchased $620,000 of raw materials and spent $970,000 on direct labour. The actual machine hours incurred was 31,850 hours.
Manufacturing overhead costs were as followed:
Indirect Material: $ 26000
Indirect Labour : $ 64,000
Depreciation on Plant and Equipment : $ 250,000
Electricity : 66,000
Other : 76,000
LTC Company allocates manufacturing cost to work in process on the basis of machine hours. The budgeted manufacturing overhead for the year was $480,000 and the budgeted machine hours were 32,000 hours.
Sales revenue was $2,640,000 for the year. Sales and administrative expenses amounted to $274,000.
Required:
Question 1: Show ALL your workings and prepare
(i) Schedule of Cost of Goods Manufactured for 2019
(ii) Cost of Goods Sold Report, for 2019
(iii) Income Statement for 2019
(iv) Explain the differences between a prime and conversion cost.
(v) Explain the difference between a product cost and a non-manufacturing cost.