5. George\'s Garage incurred the following costs during May: Raw Materials $45,0

Question

5. George's Garage incurred the following costs during May:
Raw Materials $45,000
Direct Labor $115,000
Manufacturing Overhead $56,000
Selling Expenses $35,400
Administrative Expenses $22,600
Interest Expense $12,500

During the month, 6,000 units of product were manufactured and 5,500 units of product were sold. On May 1, George's carried no inventories.

(a.) Calculate the cost of goods manufactured during May and the average cost per unit of product manufactured.

(b.) Calculate the cost of goods sold during May.

(c.) Where in the financial statements will the difference between cost of goods manufactured and cost of goods sold be classified?

Explanation / Answer

aw Materials------------------ $45,000 Direct Labor ------------------ $115,000 Manufacturing Overhead --- $56,000 Total manufacturing cost--$216,000 Units produced ------------- 6,000 Per unit cost 216,000/6000 = $36 Cost of goods sold: 5,500 units x $36 = $198,000 As regards (c) - Statement of Cost of Goods Manufactured and Sold

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