Question

The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment: Sales $1,261,800 Gross profit 340,700 Indirect labor 113,600 Indirect materials 46,700 Other factory overhead 21,500 Materials purchased 643,500 Total manufacturing costs for the period 1,393,000 Materials inventory, end of period 46,700
Using the above information, determine the following amounts:

a. Cost of goods sold $ 921,100
b. Direct materials cost $ 550,100
c. Direct labor cost $ 731,900

Answer 1

Answer:

(a) $921,100

(b) $643,500

(c) $567,700

Explanation:

(a) Cost of goods sold:

= Sales - Gross profit

= $1,261,800 - $340,700

= $921,100

(b) Direct Material Cost:

= Materials purchased - Indirect materials - Materials inventory

= $643,500 - $46,700 - $46,700

= $643,500

(c) Direct labor cost:

= Total manufacturing costs for the period - Direct materials - factory overhead (Indirect labor + Indirect materials + Other factory overhead)

= $1,393,000 - $643,500 - $181,800

= $567,700