Question

1. Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect. 2. Prepare a schedule of cost of goods manufactured for Business Solutions for the month ended January 31, 2020. Assume the following manufacturing costs: Direct materials: $2,200 Factory overhead: $520 Direct labor: $1,000 Beginning work in process: none (December 31, 2019) Ending work in process: $600 (January 31, 2020) Beginning finished goods inventory: none (December 31, 2019) Ending finished goods inventory: $370 (January 31, 2020) 3. Prepare the cost of goods sold section of a partial income statement for Business Solutions for the month ended January 31, 2020.

Answer 1

Answer:

Cost of goods manufactured= $3,120

COGS= $2,750

Explanation:

To calculate the cost of goods manufactured, we need to use the following formula:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

Cost of goods manufactured:

beginning WIP= 0

direct materials= 2,200

Direct labor= 1,000

Factory overhead= 520

Ending work in process= 600

Cost of goods manufactured= $3,120

Now, we can determine the cost of goods manufactured:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 0 + 3,120 - 370

COGS= $2,750