Answered: Ellerson Company provided the following…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Objective 3 - Define tangible and intangible products, and explain why there
are different product cost definttions., 4 - Prepare income statements for
manufacturing and service organizations.
Ellerson Company provided the following information for the last calendar
year.
Beginning inventory:
Direct materials $68,000
Work in process 29,400
Finished goods 43,200
Ending inventory:
Direct materials $70,400
Work in process 40,000
Finished goods 42,100
During the year, direct materials purchases amounted to $278,000, direct
labor cost was S189,000, and overhead cost was $523,000. During the year,
100,000 units were completed.
Required:
1, Calculate the total cost of direct materials used in production.
2. Calculate the cost of goods manufactured. Calculate the unit manufacturing
cost.
3. Of the unit manufacturing cost calculated in Requirement 2, $2. 70 is direct
materials and S5.30 is overhead. What is the prime cost per unit? Conversion
cost per unit?

Ellerson Company provided the following information for the last calendar
year:
Beginning inventory:
Direct materials
$8,000
Work in process
29,400
Finished goods
43,200
Ending inventory:
Direct materials
$70,400
Work in process
40,000
Finished goods
42,100
During the year, direct materials purchases amounted to $278,000, direct
labor cost was $189,000, and overhead cost was $523,000. During the year,
100,000 units were completed.
Required:
1. Calculate the total cost of direct materials used in production.
2. Calculate the cost of goods manufactured. Calculate the unit manufacturing
cost.
3. Of the unit manufacturing cost calculated in Requirement 2, $2.70 is direct
materials and $5.30 is overhead. What is the prime cost per unit? Conversion
cost per unit?

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