Alexsandar Company provided the following account balances for the year ended De

ID: 2490890 • Letter: A

Question

Alexsandar Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $ 224,000 Purchases of raw materials $ 270,000 Direct labor ? Administrative expenses $ 158,000 Manufacturing overhead applied to work in process $ 343,000 Total actual manufacturing overhead costs $ 373,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 62,500 $ 30,700 Work in process ? $ 32,500 Finished goods $ 37,700 ? The total manufacturing costs for the year were $692,000; the cost of goods available for sale totaled $732,000; the unadjusted cost of goods sold totaled $666,500; and the net operating income was $42,500. The company’s overapplied or underapplied overhead is closed entirely to cost of goods sold. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.) Required: a. Prepare a schedule of cost of goods manufactured.

Explanation / Answer

Alexsandar Company

Schedule of Cost of Goods Manufactured

For the Year Ended December 31

Raw materials used in production

$ 301,800

Direct labor

$ 46,400

Manufacturing overhead applied

$ 343,800

Total manufacturing costs

$ 692,000

Add: Work in process inventory, beginning

$ 34,800

$ 726,800

Deduct: Work in process inventory, ending

$ 32,500

Cost of goods manufactured

$ 694,300