Question

Primare Corporation has provided the following data concerning last month’s manufacturing operations. Purchases of raw materials $ 30,000 Indirect materials included in manufacturing overhead $ 5,000 Direct labor $ 58,000 Manufacturing overhead applied to work in process $ 87,000 Underapplied overhead $ 4,000 Inventories Beginning Ending Raw materials $ 12,000 $ 18,000 Work in process $ 56,000 $ 65,000 Finished goods $ 35,000 $ 42,000 Required: 1. Prepare a schedule of cost of goods manufactured for the month. 2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

Answer 1

Answer:

Primare Corporation

Cost of Goods Sold:

Raw materials:

Beginning Inventory     $12,000

Purchase                        30,000      

Ending Inventory           (18,000)

Cost of raw materials                    $24,000

Direct labor                                      58,000

Beginning Work in process            56,000

Ending Work in process                (65,000)

Manufacturing overhead                87,000

Cost of goods produced            $160,000

Beginning Finished goods           35,000

Ending Finished goods               (42,000)

Underapplied overhead                  4,000

Cost of goods sold                    $157,000              

Explanation:

a) Data and Calculations:

Raw materials purchase  $ 30,000

Direct labor                       $ 58,000

Manufacturing overhead $ 87,000

Underapplied overhead    $ 4,000

Inventories            Beginning        Ending

Raw materials       $ 12,000         $ 18,000

Work in process     56,000           65,000

Finished goods      35,000           42,000

b) The cost of goods sold is the addition of the cost of production with the beginning inventory of finished goods and the ending inventory of finished goods.  The underapplied overhead is added to the cost of goods sold.