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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
An analysis of the accounts of Williams Company reveals the following manufacturing cost data for the month ended September 30, 2017.
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Inventories Beginning Ending
Raw materials $12,000 $11,300
Work in process 7,500 5,000
Finished goods 10,000 12,000
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Costs incurred: raw materials purchases $62,500, direct labor $51,000, manufacturing overhead $25,650. The specific overhead costs were: indirect labor $6,500, factory insurance $5,000, machinery depreciation $6,000, machinery repairs $2,800, factory utilities $3,600, miscellaneous factory costs $1,750. Assume that all raw materials used were direct materials.
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Instructions
a) Prepare the cost of goods manufactured schedule for the month ended September 30, 2017.
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b) Show the presentation of the ending inventories on September 30, 2017, balance sheet.
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c) Williams Company is considering the purchase of a new automated assembly line for its factory. The purchase would result in several changes in Williams’ cost structure. Both direct labor and indirect labor would decrease by 40%. Factory insurance would increase to $8,000, machinery depreciation would double, machinery repairs would decrease to $500, utilities would decrease to $2,500 and miscellaneous factory costs would increase to $1,850. Materials usage would remain at current levels.
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Analyze the new purchase by preparing a cost of goods manufactured schedule for September 30, 2017 using the new data. Should Williams Company make this purchase? Explain the factors that should be considered in the decision?
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