How do i solve the question below?

Question

The books of a manufacturing company presents the following data for the following data for the month of April 2002. Direct labour cost $56,000. Inventory accounts showed the following opening and closing balances:

Opening inventory of raw materials: $8,000; closing inventory of raw materials:$10,600; opening inventory of work-in-progress: $10,500; closing inventory of work in progress: $14,500; opening inventory of finished goods:$17,600; closing inventory of finished goods:$19,00. Other data are: selling expense: $ 3,500; general and administration expenses: $2,500; sales for the month: $ 75,000. You are required to: a.)compute the value of materials purchased and b.) prepare a statement showing the various elements of cost and also the profit.

Answer 1

1) Materials used formula

Materials used = Opening raw materials + Purchases − Closing raw materials

So:

Materials used = 8,000 + Purchases − 10,600

Materials used = Purchases − 2,600

Rearrange:

Purchases = Materials used + 2,600

So you must know materials used first before finding purchases.

2) Cost of production statement format

Direct materials used = unknown

Direct labour = 56,000

Prime cost = Direct materials used + 56,000

Add factory overhead = missing from question

So:

Factory cost

= Direct materials used + 56,000 + Factory overhead

Adjust for work in process:

Cost of goods manufactured

= Factory cost + Opening WIP − Closing WIP

= Factory cost + 10,500 − 14,500

= Factory cost − 4,000

Adjust for finished goods:

Cost of goods sold

= Cost of goods manufactured + Opening finished goods − Closing finished goods

= Cost of goods manufactured + 17,600 − 19,000

= Cost of goods manufactured − 1,400

Then:

Profit

= Sales − Cost of goods sold − Selling expense − Admin expense

= 75,000 − COGS − 3,500 − 2,500

 The inventory numbers help you adjust raw materials, work in process, and finished goods, but they do not tell you the missing manufacturing cost by themselves. So the problem is incomplete as typed.