Cost of goods sold: Cost of goods sold is the accumulated total of all the direct costs incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads . Direct Material cost: Direct material cost is the cost of the material which is directly involved in the production. It constitutes the major portion of the total cost of the finished product. For example: The cost of plastic is the direct material for manufacturing a bottle. Direct Labor Cost: Direct labor cost is the cost of the labor paid to the employees who are directly involved in converting the raw materials to the finished products. It constitutes the major portion of the total cost of the finished product. For example: Wages paid to the mechanic for repairing an automobile. the amount of cost of goods sold of E incorporation.

Question

Jones Company is preparing the financial statement dated December 31 of the current year. Ending inventory information. Unit Cost When Net Realizable Value Ite Quantity m onHand Acquired (Market) at Year-End A 69 $ 20 $ 23 B 99 48 38 29 60 56 D 89 38 33 E 369 13 18 Required 1. Compute the valuation that should be used the current year ending inventory using the LCM rule applied on an item-by-item basis.

Answer 1

Question

Chapter 2, Problem 2E

(a)

To determine

Cost of goods sold:

Cost of goods sold is the accumulated total of all the direct costs incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

Direct Material cost:

Direct material cost is the cost of the material which is directly involved in the production. It constitutes the major portion of the total cost of the finished product. For example: The cost of plastic is the direct material for manufacturing a bottle.

Direct Labor Cost:

Direct labor cost is the cost of the labor paid to the employees who are directly involved in converting the raw materials to the finished products. It constitutes the major portion of the total cost of the finished product. For example: Wages paid to the mechanic for repairing an automobile.

the amount of cost of goods sold of E incorporation.

(b)

To determine

the amount of direct material cost of E incorporation.

(c)

To determine

the amount of direct labor cost of E incorporation.

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Jones Company is preparing the financial statement dated December 31 of the current year. Ending inventory information. Unit Cost When Net Realizable Value Ite Quantity m onHand Acquired (Market) at Year-End A 69 $ 20 $ 23 B 99 48 38 29 60 56 D 89 38 33 E 369 13 18 Required 1. Compute the valuation that should be used the current year ending inventory using the LCM rule applied on an item-by-item basis.

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