The following information is available for the first month of operations of Diac
ID: 2436593 • Letter: T
Question
The following information is available for the first month of operations of Diacox Inc., a manufacturer of sports apparel:
Sales
$2,050,000
Gross profit
490,000
Indirect labor
152,000
Indirect materials
45,000
Other factory overhead
515,000
Materials purchased
801,000
Total manufacturing costs for the period
1,710,000
Materials inventory, end of period
36,800
?
Using the given information, determine the following:
Cost of goods sold
Direct materials cost
Direct labor cost
Sales
$2,050,000
Gross profit
490,000
Indirect labor
152,000
Indirect materials
45,000
Other factory overhead
515,000
Materials purchased
801,000
Total manufacturing costs for the period
1,710,000
Materials inventory, end of period
36,800
Explanation / Answer
Cost of goods sold = Sales - gross profit
= 2,050,000 - 490,000 = $1,560,000
Direct material cost = Materials purchased - indirect materials - materials inventory, end of period
= 801,000 - 45,000 - 36,800 = $719,200
Direct labor cost = total manufacturing costs for the period - indirect labor - indirect materials - other factory overhead - direct material cost
= 1,710,000 - 152,000 - 45,000 - 515,000 - 719,200 = $278,800
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