Question

Information for Basic Factory, Inc., as if December 31 follows:

Answer 1

Answer:

Basic Factor, Inc.

Cost of Goods Manufactured statement for the year ended December 31:

Opening Raw Materials Inventory = $88,000

Direct Materials = $180,000

Total cost of raw materials available = $268,000

Less Closing Raw Materials Inventory = $68,000

Cost of raw materials used in production = $200,000

Opening goods in process inventory = $25,000

Cost of raw materials used in production = $200,000

Direct Labour = $88,000

Factory Supplies = $9,500

Total Direct Cost = $322,500

Less closing goods in process inventory = $29,800

Prime Cost = $292,700

add Fixed Factory Cost:

Depreciation of Equipment = $27,000

Factory Rent = $20,000

Factory Utilities = $16,000

Factory Insurance = $17,000

Cost of Manufactured Goods = $372,700

Explanation:

Cost of manufactured goods is the managerial accounting term used to describe the total cost incurred in producing goods.  It includes not only the variable costs, but also the fixed costs of production.

A step-by-step method of preparing the statement of Cost of Manufactured Goods (COGM) yields the costs of raw materials available for production, the cost of raw materials used, the total direct cost, and the prime cost.