Concept Introduction-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.
Requirement-1:
To PrepareTo prepare schedule of cost of goods manufactured.
![Check Mark](/static/check-mark.png)
Answer to Problem 8E
Schedule of cost of goods manufactured is prepared as under-
Cost of goods manufactured | ||||
| Garcon Co. | Pepper Co. | ||
Particulars | Amount ($) | Amount ($) | Amount ($) | Amount ($) |
Beginning raw material inventory | 7,250 | | 9,000 | |
Add: Raw materials purchases | 33,000 | | 52,000 | |
Raw material available for use | 40,250 | | 61,000 | |
Less: Raw material ending balance | 5,300 | | 7,200 | |
Direct material used | | 34,950 | | 53,800 |
Direct labor | | 19,000 | | 35,000 |
Factory | | | | |
Rental cost on factory equipment | 27,000 | | 22,750 | |
Factory utilities | 9,000 | | 12,000 | |
Factory supplies used | 8,200 | | 3,200 | |
Indirect labor used | 1,250 | | 7,660 | |
Repair factory equipment | 4,780 | | 1,500 | |
Total factory overhead | | 50,230 | | 47,110 |
Total | | 104,180 | | 135,910 |
Add: Work in process, beginning balance | | 14,500 | | 19,950 |
Total cost of work in process | | 118,680 | | 155,860 |
Less: Work in process, ending balance | | 22,000 | | 16,000 |
Cost of goods manufactured | 96,680 | 139,860 |
Explanation of Solution
Garcon Co.
Direct material used is calculated as follows-
Cost of goods manufactured is calculated as follows-
Pepper Co.
Cost of goods manufactured is calculated as follows-
Conclusion:
Thus, cost of goods manufactured for both the companies are calculated.
Concept Introduction-Cost of goods sold-
The cost of goods sold can be defined as the cost incurred in order to convert a raw material into finished goods. The cost of goods sold includes direct expenses i.e. direct material, direct labor and overheads like - variable manufacturing overheads and fixed manufacturing overhead as well. It is subtracted from the sales to know the gross profit of the business.
Requirement-2:
To Compute:
To compute cost of goods sold.
![Check Mark](/static/check-mark.png)
Answer to Problem 8E
Schedule of Cost of goods sold | ||
| | |
Garcon Co. | Pepper Co. | |
Particulars | Amount ($) | Amount ($) |
Cost of goods manufactured | 96,680 | 139,860 |
Add: Finished goods inventory, beginning balance | 12,000 | 16,450 |
Goods available for sale | 108,680 | 156,310 |
Less: Finished goods inventory, ending balance | 17,650 | 13,300 |
Cost of goods sold | 91,030 | 143,010 |
Explanation of Solution
Garcon Co.
Pepper Co.
Conclusion:
Thus, cost of goods sold for both the companies are calculated.
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Chapter 18 Solutions
FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS
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