Question

The following information is available for the first year of operations of Engle Inc., a manufacturer of fabricating equipment: Sales $7,270,000 Gross profit 1,450,000 Indirect labor 330,000 Indirect materials 195,000 Other factory overhead 90,000 Materials purchased 5,100,000 Total manufacturing costs for the period 6,170,000 Materials inventory, end of period 480,000 Determine the following amounts:

Answer 1

Answer:

Consider the following calculations

Explanation:

Step 1. Given information

• Sales $7,270,000
• Gross profit 1,450,000
• Indirect labor 330,000
• Indirect materials 195,000
• Other factory overhead 90,000
• Materials purchased 5,100,000
• Total manufacturing costs for the period 6,170,000
• Materials inventory, end of period 480,000

Step 2. Calculation according to the following formulas.

a. Cost of goods sold = Sales-Gross profit = 7270000-1450000= $582000

b. Direct materials cost = 5100000-195000-480000= $4425000  

c. Direct labor cost = 6170000-4425000-330000-195000-90000= $1130000