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Anderson Enterprises
Inventories: March 1 March 31
Raw material $18,000 $15,000
Work in process $9,000 $6,000
Finished goods $27,000 $ 36,000
Additional information for March:
Raw meterial purchased $42,000
Direct labor payroll $30,000
Direct labor rate per hour $7.50
Overhead rate per direct labor hour $10.00
1) Refer to Anderson Enterprises. For March, Prime cost incurred was
2) Refer to Anderson Enterprises. For March, Conversion cost incurred was
3) Refer to Anderson Enterprises. For March, Cost of Goods Manufactured was
Expert Answer
Solution 1) Direct Material consumed
Add: Opening stock Of Raw Material = $18000
Add: Material purchased = $42000
$60000
Less: Closing stock of raw material =($15000)
$45000
Add: Direct Labour =$30000
Prime Cost $75000 ( Answer)
Solution 2)
Prime cost = $75000
Add: overhead expenses ( 4000 * $10)= $40000
$115000
Add: opening work in progress = $9000
$124000
Less: Closing stock of work in progress ($6000)
Factory cost or conversion cost = $118000 ( Answer)
Calculation of overhead charges
number of hours = Direct labour payroll / direct labour rate per hour
=$30000/ $7.50
= 4000 hours
overhead rate = 4000 hours * $10 per hour = $40000
Solution 3)
Factory cost or conversion cost = $118000
Add: opening stock of finished goods = $27000
$145000
Less: closing stock of finished goods ($36000)
Cost of goods manufacture $109000 ( Answer)
