Question

Cost flow relationships The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment:
Sales $ 12,755,000
Gross profit 5,359,700
Indirect labor 422,600
Indirect materials 185,500
Other factory overhead 834,900
Materials purchased 4,251,600
Total manufacturing costs for the period 8,122,000
Materials inventory, end of period 298,900
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Determine the following amounts. Round your answers to the nearest dollar.
Cost of goods sold $_______
Direct materials cost $________
Direct labor cost $_______.

Answer 1

Answer:

Cost of goods sold= $7,395,300

Direct material cost= $3,727,200

Direct labor cost= $3,137,300

Explanation:

A. Calculation to Determine Cost of goods sold using this formula

Cost of goods sold = Sales - Gross Profit

Let plug in the formula

Cost of goods sold= $ 12,755,000 - 5,359,700

Cost of goods sold= $7,395,300

Therefore Cost of goods sold will be $7,395,300

B. Calculation to Determine Direct material cost using this formula

Direct material cost= Material purchased - Indirect materials - Material Inventory, end of period

Let plug in the formula

Direct material cost= 4,251,600 - 185,500 - 298,900

Direct material cost= $3,727,200

Therefore Direct material cost will be $3,727,200

c. Calculation to determine Direct labor cost using this formula

Direct labor cost= Total manufacturing cost - Direct material costs - other factory overhead - Indirect labor

Let plug in the formula

Direct labor cost= 8,122,000 - $3,727,200 - 834,900 - 422,600

Direct labor cost= $3,137,300

Therefore Direct labor cost will be $3,137,300