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16 September, 09:17

Compute the total manufacturing costs using the following information. Raw materials inventory, January 1 $ 20000 Raw materials inventory, December 31 40000 Work in process, January 1 18000 Work in process, December 31 12000 Finished goods, January 1 40000 Finished goods, December 31 32000 Raw materials purchases 1680000 Direct labor 760000 Factory utilities 150000 Indirect labor 50000 Factory depreciation 400000 Operating expenses 420000

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  1. 16 September, 09:43
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    Cost of goods manufactured 3,446,000

    Cost of Goods Sold 3,454,000

    Explanation:

    First, we calcualte the values for the three main cost components:

    materials, labor and overhead.

    Raw materials

    beginning 20,000

    purchases 1,680,000

    Ending (40,000)

    Used in Produciton 1,660,000

    Direct Labor 760,000

    utilities 150,000

    indirect labor 50,000

    depreciation 400,000

    operating expenses 420,000

    total overhead 1,020,000

    Total cost added:

    materials 1,660,000

    labor 760,000

    overhead 1,020,000

    total 3,440,000

    Then, we calculate the COGM cost of goods manufactured.

    WIP 18,000

    cost added 3,440,000

    WIP ending (12,000)

    Cost of goods manufactured 3,446,000

    And finally, the cost of goods sold.

    Finished goods beginning 40,000

    COGM 3,446,000

    ending (32,000)

    Cost of Goods Sold 3,454,000
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