Flow of costs through a manufacturer's inventory accounts
Root Shoe Company makes loafers. During the most recent year, Root incurred total manufacturing costs of $26,400,000. Of this amount, $2,100,000 was direct materials used and $19,800,000 was direct labor. Beginning balances for the year were Direct materials inventory, $600,000; Work in process inventory, $800,000; and Finished goods inventory, $700,000. At the end of the year, inventory accounts showed these amounts:
|
Materials
|
Direct Labor
|
Manufacturing Overhead
|
|
Direct materials inventory
|
$ 900,000
|
$ 0
|
$ 0
|
|
Work in process inventory
|
400,000
|
600,000
|
400,000
|
|
Finished goods inventory
|
800,000
|
150,000
|
40,000
|
Requirements
1. Compute Root Shoe Company's cost of goods manufactured for the year.
2. Compute Root's cost of goods sold for the year.
3. Compute the cost of materials purchased during the year.