The following information is available for the first month ofoperations of Korv

Question

The following information is available for the first month ofoperations of Korv Inc., a manufacturer of art and craft items:

Sales                                                                          775,000

Grossprofit                                                                265,000

Indirectlabor                                                             63,000

Indirectmaterials                                                       32,000

Other factoryoverhead                                              17,500

Materialspurchased                                                   303,000

Total manufacturing costs for theperiod                   620,000

Materials inventory, end ofperiod                            35,000

Using the above information, determine the followingmissing amounts:

Explanation / Answer

Cost of goodssold     = Sales - Gross Profit $7,75,000 - $2,65,000 $510,000 Direct MaterialCost   = Material purchased - Material ending                                 Inventory $3,03,000 - $35000 $2,68,000 Direct Laborcost       = Manufacturing cost - Factory cost - Direct material $6,20,000 - (63000+32000 + 17500) - $2,68,000 $2,39,500 Notes:   Prime cost = Direct material +Direct labor Manufacturing cost      = Prime Cost + Factory cost

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