Q21E - Horngren'S Financial And Managerial Accounting

Question

Computing cost of goods manufactured and cost of goods sold 

Use the following information for a manufacturer to compute cost of goods manufactured and cost of goods sold:

Balances:                                             Beginning             Ending 

Direct Materials                               \( 27,000               \) 28,000 

Work-in-Process Inventory             40,000                    32,000 

Finished Goods Inventory                18,000                   25,000 

Other information: 

Purchases of direct materials                                        $ 73,000 

Direct labor                                                                         88,000 

Manufacturing overhead                                                  43,000

Step-by-Step Solution

Answer

The cost of goods manufactured is $211,000 and the cost of goods sold is $204,000.

Step-by-Step Solution Step 1 : Computation of cost of goods manufactured

Schedule of cost of goods manufactured
	Amount ($)
Direct materials beginning	$27,000
Add: Purchases	$73,000
	$100,000
Less: Ending Direct Materials	$28,000
Raw Material Used	$72,000
Direct Labor	$88,000
Manufacturing Overhead	$43,000
Total manufacturing costs incurred during the year	$203,000
Add: Opening WIP	$40,000
	$243,000
Less: Ending WIP	$32,000
Cost of goods manufactured	$211,000

Step 2: Computation of Cost of goods sold

Schedule of cost of goods sold
	Amount ($)
Cost of goods manufactured	$211,000
Add: Opening finished goods	$18,000
	$229,000
Less: Ending finished goods	$25,000
Cost of goods sold	$204,000