Assume you are starting a new business involving the manufacture and sale of a n
ID: 2383668 • Letter: A
Question
Assume you are starting a new business involving the manufacture and sale of a new product. Raw materials costs are $45 per product. Direct labor costs are expected to be $32 per product. You expect to sell each product for $115. You plan to produce 110 products next month and expect to sell 90 products. During the second month, you plan to produce 110 products but expect sales in the month to be 115 products. Prepare cost of production, cost of goods sold, and inventories schedules for the two months.
Explanation / Answer
Raw Material per Product
45
Direct Labor Cost Product
32
Variable cost
77
Sell price per product
115
Cost Sheet for the Period
Unit produced 110
Raw Material 45 * 110
4950
Direct Labor Cost 32*110
3520
Cost Of Production
8470
ADD Opening Finished goods
0
Cost of Goods Available for sale
8470
Less Closing stock of Finished goods 20units *77
1540
Cost of Goods sold 90*77
6930
Cost Sheet for the Period
Unit produced 110
Raw Material 45 * 110
4950
Direct Labor Cost 32*110
3520
Cost Of Production
8470
ADD Opening Finished goods 20*77
1540
Cost of Goods Available for sale( 110+20)*77
10010
Less Closing stock of Finished goods 15units *77
1155
Cost of Goods sold115*77
8855
Raw Material per Product
45
Direct Labor Cost Product
32
Variable cost
77
Sell price per product
115
Cost Sheet for the Period
Unit produced 110
Raw Material 45 * 110
4950
Direct Labor Cost 32*110
3520
Cost Of Production
8470
ADD Opening Finished goods
0
Cost of Goods Available for sale
8470
Less Closing stock of Finished goods 20units *77
1540
Cost of Goods sold 90*77
6930
Cost Sheet for the Period
Unit produced 110
Raw Material 45 * 110
4950
Direct Labor Cost 32*110
3520
Cost Of Production
8470
ADD Opening Finished goods 20*77
1540
Cost of Goods Available for sale( 110+20)*77
10010
Less Closing stock of Finished goods 15units *77
1155
Cost of Goods sold115*77
8855
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