Armidale Comfort manufactures and sells high quality tables made of pine wood. The company’s 2021 books contain the following information:
Information about treated pine wood:
Beginning inventory $200,000
Purchases $616,000
Ending inventory $104,000
manufacturing labor cost (direct) $160,000
combined cost of labor and materials (both indirect) cost $120,000
Work-in-process/progress (WIP) inventory (opening) $8,000
Work-in-process/progress (WIP) inventory (closing) $40,000
Inventory of completed tables (opening) $240,000
Inventory of completed tables (closing) $160,000
Required: Using the information given in the question, work out the following for the year 2021:
a. Total cost of the pine wood used during the year?
b. The ‘cost goods manufactured’ for the year?
c. The ‘cost of goods sold’ for the year?
d. The total of the ‘prime cost’ and the ‘conversion cost’ for the year, showing each separately as well?
e. Define ‘Prime cost’ and ‘Conversion cost’ in your own words.