The following events took place for Chi-Lite Inc. during June 2016, the first mo
ID: 2493866 • Letter: T
Question
The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes: • Purchased $396,730of materials. • Used $343,310 of direct materials in production. • Incurred $294,600 of direct labor wages. • Applied factory overhead at a rate of 74% of direct labor cost. • Transferred $816,250 of work in process to finished goods. • Sold goods with a cost of $797,470. • Sold goods for $1,409,300. • Incurred $318,060 of selling expenses. • Incurred $120,840 of administrative expenses. Required: A. determine the inventory balances at the end of the first month of operations raw materials work in process finished goods b. determine the cost of goods sold
Explanation / Answer
A. determine the inventory balances at the end of the first month of operations raw materials work in process finished goods
Raw materials= purcases-used in production=$396,730-$343,310=53,420
WIP = NIL assuming they are transferred to Finished Goods
Finished Goods= Transfered from WIP - Cost of goods sold=$816,250-$797,470=18780$
b. determine the cost of goods sold
b. determine the cost of goods sold
Amt Amt Opening Stock of Raw Material 0 Add: Purchase of Raw materials 396,730 Add: Purchase Expenses 0 Less: Closing stock of Raw Materials 53,420 Raw Materials Consumed 343,310 Direct Wages (Labour) 294600 Direct Charges 0 Prime cost (1) 637,910 Add :- Factory Over Heads: 74%of direct labour 218004 Works cost Incurred 855,914 Add:- Administration Over Heads:- 120,840 Cost of Production (3) 976,754 Add: Opening stock of Finished Goods 0 Less: Closing stock of Finished Goods 18780 Cost of Goods Sold 957,974 ADD: S & D OH 318,060 cost of sales 1,276,034Related Questions
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