Question

The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils:
Sales $792,000
Gross profit $462,000
Cost of goods manufactured $396,000
Indirect labor $171,600
Factory deprecation $26,400
Materials purchased $244,200
Total manufacturing costs for the period $244,200
Materials inventory, ending $33,000
Using the information given, determine the following missing amounts:
Cost of goods sold
Finished goods inventory at the end of the month
Direct materials cost
Direct labor cost
Work in process inventory at the end of the month

Answer 1

Answer: See explanation

Explanation:

a. Cost of goods sold

This will be:

= Sales - Gross profit

= $792,000 - $462,000

= $330,000

b. Finished goods inventory at the end of the month.

This will be:

= Cost of goods manufactured - Cost of goods sold

= $396000 - $330000

= $66000

c. Direct materials cost

This will be:

= Materials purchased - Material inventory ending

= $244200 - $33000

= $211200

d. Direct labor cost

This will be:

= Manufacturing cost - Direct materials - Overhead

= $455400 - $211200 - $198000

= $46200

e. Work in process inventory at the end of the month

This will be:

= $455400 - $396000

= $59400

Note that:

Overhead cost= Indirect labor cost + Depreciation

= $171600 + $26400

= $298000