Reference no: EM132926275
Question - The following data refer to Sunshine Sdn Bhd for the current year: Schedules of cost of goods manufactured and sold; income statement
Sales revenue $2 526 000
Raw material inventory, 1 January 106 800
Purchases of raw material 877 200
Raw material inventory, 31 December 70 800
Direct labour cost incurred 568 800
Selling and administrative expenses 322 800
Indirect labour cost incurred 180 000
Council rates 108 000
Depreciation on factory building 150 000
Income tax expense 30 000
Indirect material used 54 000
Depreciation on factory equipment 72 000
Insurance on factory and equipment 48 000
Electricity for factory 84 000
Work in process inventory, 1 January 0
Work in process inventory, 31 December 48 000
Finished goods inventory, 1 January 42 000
Finished goods inventory, 31 December 48 000
Interpreting the schedule of cost of goods manufactured.
Refer to the schedule of cost of goods manufactured prepared in above.
Required -
a. How much of the manufacturing costs incurred during the current year remain in work in process inventory on 31 December?
b. Suppose Sunshine Sdn Bhd had increased its production in the current year by 20 per cent. What effect would this change have on the direct material cost shown in the schedule of cost of goods manufactured? Why?
c. Answer the same question as in requirement 2 for depreciation on the factory building.
d. Suppose that only half of the $72 000 in depreciation on equipment was related to factory machinery, and the other half was related to selling and administrative equipment. Now would this have changed the schedule of cost of goods manufactured?