Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical

ID: 2328740 • Letter: C

Question

Compute the Cost of Goods Manufactured and Cost of Goods Sold for

West Nautical Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials.

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Start the calculation for cost of goods manufactured by calculating the direct materials used.

West Nautical Company

Calculation of Direct Materials Used

For Current Year

Beginning of Year End of Year End of Year

Raw materials inventory…….. $27,000 $30,000 Insurance of plant………... $10,000

Work in process inventory…. $ 42,000 $37,000 Depreciation-plant building and equipment.............. $12,900

Finished goods inventory…… $ 17,000 $21,000 Repairs and maintenance-plant................................ $3,500

Purchases of direct materials… $75,000 Marketing expenses................................................... $79,000

Direct labor………………… $87,000 General and administrative expenses........................ $22,500

Indirect labor……………… $39,000

Calulate the goods manufactured.

West Nautical Company

Calculation of Direct Materials Used

For Current Year

Explanation / Answer

Solution:

From the given data we need to find the given requirements,

So the following are the calculations for the requirements.

First we find, Direct material used

Direct material used =

Beginning raw material inventory + Purchase of direct material - Ending raw material inventory.

= $27000 + $75000 - $30000

= $72000

Now we find cost of goods manufactured :

Cost of goods manufactured for WEST NATURAL COMPANY For current year

Working notes:

Manufactured overhead =

Indirect labour + insurance on plant + Depreciation + Repairs and maintanance

Account details Amount ($) Beginning work in process inventory 42000 ADD: Manufacturing costs incurred Direct materials used 72000 Direct labour 87000 Manufacturing over head 65400 Total manufacturing costs 266400 LESS: Ending work in process inventory 37000 COST OF GOODS MANUFACTURED 229400

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Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical

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Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical

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