Q20E_1 - Horngren'S Financial And Managerial Accounting

Question

Preparing a schedule of cost of goods manufactured Wilson Corp., a lamp manufacturer, provided the following information for the year ended December 31, 2018:

Balances: Beginning Ending

 Direct Materials \( 59,000 \) 23,000 

Work-in-Process Inventory 109,000 62,000 

Finished Goods Inventory 41,000 44,000 

Other information: 

Depreciation, plant building and equipment $ 16,000 

Direct materials purchases 151,000 

Insurance on plant 24,000 

Sales salaries 47,000 

Repairs and maintenance—plant 10,000 

Indirect labor 39,000 

Direct labor 121,000 

Administrative expenses 60,000 

Requirements 1. Use the information to prepare a schedule of the cost of goods manufactured.

Step-by-Step Solution

Answer

The required schedule of cost of goods manufactured is prepared in step 2.

Step-by-Step Solution Step 1 : Computation of Direct materials

$$\begin{gathered} \mathbf{Direct}\mathbf{ }\mathbf{Material}\mathbf{=}\mathbf{Opening}\mathbf{ }\mathbf{Stock}\mathbf{+}\mathbf{Purchases}\mathbf{-}\mathbf{ClosingStock} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{59}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{151}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{23}\mathbf{,}\mathbf{000} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{187}\mathbf{,}\mathbf{000} \end{gathered}$$

Step 2 : Preparation of schedule of cost of goods manufactured

Schedule of cost of goods manufactured
	Amount ($)	Amount ($)
Direct Material		$187,000
Direct Labor		$121,000
Prime Costs		$308,000
Factory Overheads
Depreciation	$16,000
Plant Insurance	$24,000
Repairs and Maintenance	$10,000
Indirect Labor	$39,000	$89,000
Factory Cost		$397,000
Add: Opening WIP		$109,000
Less: Closing WIP		$62,000
Cost of goods manufactured		$444,000