True Fit Shoe Company makes loafers. During the most recent year. True Fit incurred total manufacturing costs of $24.500.000. Of this amount. $3,000,000 was direct materials used and $16, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory. $900,000. Work-in-Process Inventory. $600,000; and Finished Goods Inventory. $1, 300,000. At the end of the year, balances were Raw Materials inventory. $800,000; Work-in-Process Inventory. $1, 700,000; and Finished Goods inventory. $390,000.

Requirements

Analyze the inventory accounts to determine:

1. Cost of raw materials purchased during the year.

2. Cost of goods manufactured for the year.

3. Cost of goods sold for the year.

4. Cost of raw materials purchased during the year.

Instructions are listed below.

Explanation:

Giving the following information:

True Fit incurred total manufacturing costs of $24.500.000. Of this amount. $3,000,000 was direct materials used and $16, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory. $900,000. Work-in-Process Inventory. $600,000; and Finished Goods Inventory. $1, 300,000. At the end of the year, balances were Raw Materials inventory. $800,000; Work-in-Process Inventory. $1, 700,000; and Finished Goods inventory. $390,000.

1) Raw material used = beginning inventory + purchases - ending inventory

3,000,000 = 900,000 + purchases - 800,000

2,900,000 = purchases

2) cost of goods manufactured = beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured = 600,000 + 24,500,000 - 1,700,000 = $23,400,000

3) COGS = beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS = 1,300,000 + 23,400,000 - 390,000 = $24,310,000