Chapter 18, Problem 13E

To determine

Concept Introduction:

Schedule of cost of goods manufactured: A schedule of cost of goods manufactured is a schedule explaining the flow of costs from raw material to the result as cost of goods manufactured for a period. The cost of goods manufactured amount if transferred to the finished goods inventory and is used to calculate cost of goods sold on income statement.

The schedule of cost of goods manufactured is as under −

Schedule of Cost of Goods manufactured
	Raw Material - Beginning
Add:	Purchases of Raw material
Less:	Raw Material - Ending
	Raw material consumed
Add:	Direct labor
	Manufacturing Overheads
Add:	Indirect labor
Add:	Factory computer supplies used
Add:	Repairs - Factory Equipment
	Rent Cost of factory building
	Total Manufacturing costs
Add:	Working in Process inventory - Beginning
Less:	Working in Process inventory - Ending
	Cost of Goods manufactured

To prepare:

Schedule of Cost of goods manufactured

Answer to Problem 13E

Solution:

Schedule of Cost of Goods manufactured
	Raw Material - Beginning	37,000
Add:	Purchases of Raw material	1,75,600
Less:	Raw Material - Ending	42,700
	Raw material consumed		1,69,900
Add:	Direct labor		2,25,000
	Manufacturing Overheads
Add:	Indirect labor	47,000
Add:	Factory computer supplies used	17,840
Add:	Repairs - Factory Equipment	5,250
	Rent Cost of factory building	57,000
	Total Manufacturing costs		1,27,090
Add:	Working in Process inventory - Beginning		53,900
Less:	Working in Process inventory - Ending		41,500
	Cost of Goods manufactured		5,34,390

Explanation of Solution

The schedule of cost of goods manufactured as is prepared as under −

Given,

• Raw material − Beginning = $ 37,000
• Work in process inventory − Beginning = $ 53,900
• Raw material purchases = $ 175,600
• Direct Labor = $ 225,000
• Factory computer supplies used = $ 17,840
• Indirect Labor = $ 47,000
• Repairs − Factory equipment = $ 5,250
• Rent cost of factory building = $ 57,000
• Raw material − Ending = $ 42,700
• Work in process inventory − Ending = $ 41,500

This is the information related to the costs involved in the process of converting raw material into manufactured goods.

1. Raw material consumed is calculated as under −

  $\begin{array}{l}Rawmaterialconsumed=\\ RawmaterialBeginning\\ +Rawmaterialpurchases\\ -RawmaterialEnding\end{array}$

  $\begin{array}{l}Rawmaterialconsumed=\$37,000+\$175,600-\$42,700\\ Rawmaterialconsumed=\$169,900\end{array}$

2. Total manufacturing costs is calculated as under −

  $\begin{array}{l}Totalmanufacturingcosts=\\ IndirectLabor\\ +Factorycomputersupplies\\ +Repairs–Factoryequipment\\ +Rentcostoffactorybuilding\end{array}$

  $\begin{array}{l}Totalmanufacturingcosts=\$47,000+\$17,840+\$5,250+\$57,000\\ Totalmanufacturingcosts=\$127,090\end{array}$

3. Cost of goods manufactured is calculated as under −

  $\begin{array}{l}Costofgoodsmanufactured=\\ Rawmaterialconsumed\\ +Directlabor\\ +Totalmanufacturingcosts\\ +WorkinprocessinventoryBeginning\\ \text{- }WorkinprocessinventoryEnding\end{array}$

  $\begin{array}{l}Costofgoodsmanufactured=\$169,900+\$225,000+\$127,090+\$53,900-\$41,500\\ Costofgoodsmanufactured=\$534,390\end{array}$

This is how cost of good manufactured is calculated.

Conclusion

Thus, the schedule of cost of goods manufactured has been prepared .