The following date were taken from the cost resords of Cummins Comapny for 2011:

Question

The following date were taken from the cost resords of Cummins Comapny for 2011: Depreciation, factory dollar 60,000^* Indirect labour 100,000^* Utilities, factory 40,000^* Insurance, factory 10,000^* Lubricants for machines 15,000^* Direct labor 200.000 Purchases of raw materials 150,000^* Considered overhead Inventories at the beginning and at the end of the year were as follows: January 1 December 31 Raw materials dollar 10,000 dollar 20,000 work in process dollar 25,000 dollar 5,000 Finished goods dollar 30,000 dollar 50,000 Required: Using the inventory cost flow matrix we discussed in class, calculate the Cost of Goods Manufactured that was transferred into finished Goods in 2011, as well as Cummins Cost of Goods Sold for 2011.

Explanation / Answer

Total manufacturing costs= direct material+direct labour +manufacturing overhead

Direct material used= Beg raw material+raw mat purchase-ending raw material
=10,000+150,000-20,000=$140,000
Direct labour=200,000
Overhead=60,000+100,000+40,000+10,000+15,000=$225,000

Total manu costs=140,000+200,000+225,000=$565,000

Cost of goods manufactured=Beg WIP+manuf costs-ending WIP
=25,000+225,000-5,000=$245,000

Cost of goods sold= Reg finished good+manufactured-ending finished goods
=30,000+245,000-50,000=$225,000

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