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muskhere
Contributor

Joined: 23 Oct 2009
Online Status: Offline
Posts: 61

Posted: 14 Nov 2009 at 16:34 \| IP Logged

CPA-05579
The following is selected information from the records of Ray, Inc.:
Purchases of raw materials $ 6,000
Raw materials, beginning 500
Raw materials, ending 800
Work-in-process, beginning 0
Work-in-process, ending 0
Cost of goods sold 12,000
Finished goods, beginning 1,200
Finished goods, ending 1,400
What is the total amount of conversion costs?
a. $5,500
b. $5,900
c. $6,100
d. $6,500
ANSWER:
Choice "d" is correct

Kindly solve

700321
Major Contributor

Joined: 26 Aug 2009
Online Status: Offline
Posts: 308

Posted: 14 Nov 2009 at 16:57 \| IP Logged

muskhere,

u got an email? I can send you it but it is many steps and I can send it in excel.

bryris
Major Contributor

Joined: 07 Dec 2008
Location: United States
Online Status: Offline
Posts: 624

Posted: 14 Nov 2009 at 17:19 \| IP Logged

You need to find direct materials USED first.

Raw materials:

500 + 6000 - x = 800
Solve for X: 5,700 <--- RM transferred to production.

Finished goods:

1,200 + 5700 + Y - 12,000 = 1,400
Solve for Y (DL and OH): 6,500

I went directly from RM to FG because WIP started and ended at 0. If there had been some figures there, I couldn't have skipped that step.

__________________
REG - 97
FAR - 97
BEC - 90
AUD - 97

venugopal
Contributor

Joined: 08 Jul 2009
Location: United States
Online Status: Offline
Posts: 64

Posted: 14 Nov 2009 at 17:33 \| IP Logged

This question requires that you memorize the schedule of COGS

If you have it memorized that right it down. You will know that first thing you need is to find is COGM

COGM = COGS + ending finished goods inv - beg finished goods inv

COGM = 12,000 +1,400 -1,200 = 12,200

raw material used + conversion cost +beg WIP - end WIP = COGM

5,700 + conversion cost + 0 - 0 = 12,200
so, conversion cost = 12,200 - 5,700 = 6,500 Hope this helps.

muskhere
Contributor

Joined: 23 Oct 2009
Online Status: Offline
Posts: 61

Posted: 14 Nov 2009 at 17:44 \| IP Logged

Thanks a ton...
I had the solution which was very confusing...this sounds simple now...:)

Is there any site which could be helpul to give some twisted questions with solutions as it will be a good practise for exam...

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