Question

1. Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect. 2. Prepare a schedule of cost of goods manufactured for Business Solutions for the month ended January 31, 2020. Assume the following manufacturing costs: Direct materials: $2,200 Factory overhead: $490 Direct labor: $900 Beginning work in process: none (December 31, 2019) Ending work in process: $540 (January 31, 2020) Beginning finished goods inventory: none (December 31, 2019) Ending finished goods inventory: $350 (January 31, 2020) 3. Prepare the cost of goods sold section of a partial income statement for Business Solutions for the month ended January 31, 2020.

Answer 1

Answer:

Csot of goods sold= $2700

Explanation:

A)

Variable:

Direct materials: $2,200

Factory overhead: $490

Direct labor: $900

Fixed:

Nono

Direct:

Direct materials: $2,200

Direct labor: $900

Indirect:

Factory overhead: $490

B)

The cost of goods sold refers to the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the goods along with the direct labor costs used to produce the goods. It excludes indirect expenses, such as distribution costs and sales force costs.

COGS=Beginning Inventory+Production during period−Ending Inventory

We need to calculate the production during the period.

Cost of manufactured period= Beginning work in progress inventory+ direct materials + direct labor + factory overhead - ending work in progress

Cost of manufactured period=0+2200+900+490-540= $3050

COGS=Beginning Inventory+Production during period−Ending Inventory= 0 + 3050 - 350 = $2700