Exercise 10-14 Cost of goods manufactured and sold LO 10-5 The following informa

Question

Exercise 10-14 Cost of goods manufactured and sold LO 10-5 The following information pertains to Flaxman Manufacturing Company for March 2018. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $ 125,000 Work in process 118,900 Finished goods 77,200 March 31 Inventory balances Raw materials $ 86,700 Work in process 146,200 Finished goods 80,500 During March Costs of raw materials purchased $ 119,000 Costs of direct labor 101,900 Costs of manufacturing overhead 62,700 Sales revenues 359,000 Required Prepare a schedule of cost of goods manufactured and sold. Calculate the amount of gross margin on the income statement.

Explanation / Answer

Prepare a schedule of cost of goods manufactured and sold.

Calculaate gross margin :

Gross margin = Sales-Cost of goods sold

= 359000-291300

Gross margin = 67700

Beginning work in process 118900 Beginning raw material 125000 Raw material purchase 119000 Less: Ending raw material -86700 Direct material used 157300 Direct labour 101900 Manufacturing overhead 62700 Total manufacturing cost 321900 Total cost of work in process 440800 Less: Ending work in process -146200 Cost of goods manufactured 294600 Beginning finished goods inventory 77200 Total cost of goods available for sale 371800 Less: Ending finished goods inventory -80500 Cost of goods sold 291300

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