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IgorC [24]
2 years ago
10

Cost Flow Relationships

Business
1 answer:
Lady_Fox [76]2 years ago
3 0

Answer:

(A) Cost of goods sold=$7,175,000

(B) Direct material cost= $3,655,000

(C) Direct labor cost= $2,825,000

Explanation:

(A) The cost of goods sold can be calculated as follows

Cost of goods sold= Sales-gross profit

Sales= $12,375,000

Gross profit= $5,200,000

Cost of goods sold= $12,375,000-$5,200,000

= $7,175,000

(B) The direct materials cost can be calculated as follows

Direct cost of materials= materials purchased-indirect materials-materials inventory

Materials purchased= 4,125,000

Indirect materials= 180,000

Materials inventory= 290,000

Direct materials cost= 4,125,000-180,000-290,000

= $3,655,000

(C) The direct labor costs can be calculated as follows

Direct labor costs= Total manufacturing cost for the specified period-direct materials-factory overhead

Total manufacturing costs= 7,880,000

Direct materials= 3,655,000

Factory overhead= indirect labor+indirect materials+other factory overhead

= 410,000+180,000+810,000

= 1,400,000

Direct labor costs= 7,880,000-3,655,000-1,400,000

= $2,825,000

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