Question

Compute the total manufacturing costs using the following information. Raw materials inventory, January 1 $ 20000 Raw materials inventory, December 31 40000 Work in process, January 1 18000 Work in process, December 31 12000 Finished goods, January 1 40000 Finished goods, December 31 32000 Raw materials purchases 1680000 Direct labor 760000 Factory utilities 150000 Indirect labor 50000 Factory depreciation 400000 Operating expenses 420000

Answer 1

Answer:

Cost of goods manufactured   3,446,000

Cost of Goods Sold          3,454,000

Explanation:

First, we calcualte the values for the three main cost components:

materials, labor and overhead.

Raw materials

beginning                     20,000

purchases                 1,680,000

Ending                        (40,000)

Used in Produciton 1,660,000

Direct Labor              760,000

utilities                            150,000

indirect labor                  50,000

depreciation                400,000

operating expenses    420,000  

total overhead           1,020,000

Total cost added:

materials   1,660,000

labor            760,000

overhead 1,020,000

total          3,440,000

Then, we calculate the COGM cost of goods manufactured.

WIP                                                   18,000

cost added                                3,440,000

WIP ending                                    (12,000)  

Cost of goods manufactured   3,446,000

And finally, the cost of goods sold.

Finished goods beginning  40,000

COGM                              3,446,000

ending                                 (32,000)  

Cost of Goods Sold          3,454,000