Exercise 10-8 Allocating product costs between ending inventory and cost of good

Question

Exercise 10-8 Allocating product costs between ending inventory and cost of goods sold LO 10-3 Adams Manufacturing Company began operations on January 1. During the year, it started and completed 1,650 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs: Raw materials purchased and used—$3,150. Wages of production workers—$3,590. Salaries of administrative and sales personnel—$1,930. Depreciation on manufacturing equipment—$5,305. Depreciation on administrative equipment—$1,775. Adams sold 1,080 units of product. Required Determine the total product cost for the year. Determine the total cost of the ending inventory. (Do not round intermediate calculations.) Determine the total of cost of goods sold. (Do not round intermediate calculations.)

Explanation / Answer

1 Raw materials purchased and used 3150 Wages of production workers 3590 Depreciation on manufacturing equipment 5305 Total product cost for the year 12045 2 Total cost of the ending inventory = 12045/1650*570= $4161 3 Total of cost of goods sold = 12045/1650*1080= $7884

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