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27 June, 09:56

Computing Cost of Manufactured and Sold Goods

Compute the cost of goods manufactured and cost of goods sold for Strike Marine Company for the most recent year using the amounts described below. Assume that raw materials inventory contains only direct materials.

Beginning of End of End of

Year Year Year

Raw materials inventory

$25,000

$28,000

Insurance on plant

$9,000

Work in process inventory

$50,000

$35,000

Depreciation plant building and equipment

$13,000

Finished goods inventory

$18,000

$25,000

Repairs and maintenance

$4,000

Purchases of direct materials

$78,000

Marketing expenses

$77,000

Direct labor

$82,000

General and administrative expenses

$29,000

Indirect labor

$15,000

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Answers (1)
  1. 27 June, 10:26
    0
    Cost of Goods Manufactured $ 213,000

    Cost of Goods Sold $ 206,000

    Explanation:

    If we add and subtract the following amounts in the correct order we get the Cost of Goods Manufactured and Sold Statement.

    Strike Marine Company

    Cost of Goods Manufactured and Sold Statement

    Raw materials inventory Beginning $25,000

    Add Purchases of direct materials $78,000

    Less Raw materials inventory Ending $28,000

    Direct Materials Used $ 75000

    Direct labor $82,000

    Manufacturing Overheads $ 41,000

    Insurance on plant $9,000

    Depreciation plant building and equipment $13,000

    Indirect labor $15,000

    Repairs and maintenance $4,000

    Total Manufacturing Costs 198,000

    Add Work in process inventory Beginning $50,000

    Cost of Goods Available for Manufacture $ 248,000

    Less Work in process inventory Ending $35,000

    Cost of Goods Manufactured $ 213,000

    Add Finished goods inventory Beginning $18,000

    Cost of Goods Available for Sale 231,000

    Less Finished goods inventory Ending $25,000

    Cost of Goods Sold $ 206,000

    The Manufacturing Overheads includes all the indirect expenses related to the manufacture of the product such as the indirect labor, the insurance and depreciation of plant and also the repairs.

    The following are operating expense and included in the income statement not in the Cost of Goods Manufactured and Sold Statement. These relate to marketing and selling department.

    Marketing expenses $77,000

    General and administrative expenses $29,000
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