Templar Company, a manufacturing firm, has supplied the following information fr

Question

Templar Company, a manufacturing firm, has supplied the following information from its accounting records for the month of November: 1. Factory supplies used Depreciation on factory building Salary of company controller Factory janitorial costs Marketing and promotion Direct labor cost Purchases of raw materials Finished Goods Inventory, Nov. 1 Finished Goods Inventory, Nov. 30 Work in Process Inventory, Nov. 1 Work in Process Inventory, Nov. 30 Materials Inventory, Nov. 1 Materials Inventory, Nov. 30 I $18,000 17,000 6,000 5,000 4,500 22,000 10,000 2,250 3,750 4,200 2,750 3,500 5,100 Required: a. Prepare a Statement of Cost of Goods Manufactured b. Prepare a Statement of Cost of Goods Sold

Explanation / Answer

Solution: a. Templar Company Statement of Cost of Goods Manufactured For the Month of November Materials inventory, Nov. 1 3,500 Purchases of materials 10,000 Materials inventory, Nov. 30 (5,100) Materials used 8,400 Direct labor 22,000 Overhead 40,000 Total manufacturing costs 70,400 Work-in-process inventory, Nov. 1 4,200 Work-in-process inventory, Nov. 30 (2,750) Cost of goods manufactured 71,850 Working Notes: Templar Company Statement of Cost of Goods Manufactured For the Month of November Materials inventory, Nov. 1 3,500 a Purchases of materials 10,000 b Materials inventory, Nov. 30 (5,100) c Materials used 8,400 d=a+b-c Direct labor 22,000 e Overhead 40,000 f [Factory supplies used + Depreciation on factory building + Factory janitorial costs] [$18,000 + $17,000 + $5,000 =$40,000] Total manufacturing costs 70,400 g=d+e+f Work-in-process inventory, Nov. 1 4,200 h Work-in-process inventory, Nov. 30 (2,750) i Cost of goods manufactured 71,850 k=g+h-i Notes: Amount in brackets are to be deducted in our calculation Overhead is the cost incurred in factory other than labor & materials b. Templar Company Statement of Cost of Goods Sold For the Month of November Cost of goods manufactured 71,850 Finished goods inventory, Nov. 1 2,250 Finished goods inventory, Nov. 30 (3,750) Cost of goods sold 70,350 Working Notes: Templar Company Statement of Cost of Goods Sold For the Month of November Cost of goods manufactured 71,850 a= calculated in A. above Finished goods inventory, Nov. 1 2,250 b Finished goods inventory, Nov. 30 (3,750) c Cost of goods sold 70,350 d=a+b-c Notes: Amount in brackets are to be deducted in our calculation Please feel free to ask if anything about above solution in comment section of the question.

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