The following events took place at a manufacturing company for the current year:

Question

The following events took place at a manufacturing company for the current year:

(1) Purchased $106,000 in direct materials.
(2) Incurred labor costs as follows: (a) direct, $61,500 and (b) indirect, $15,800.
(3) Other manufacturing overhead was $118,000, excluding indirect labor.
(4) Transferred 85% of the materials to the manufacturing assembly line.
(5) Completed 70% of the Work-in-Process during the year.
(6) Sold 90% of the completed goods.
(7) There were no beginning inventories.

What is the company's Cost of Goods Sold?

Explanation / Answer

1. cost of goods manufactured: Direct materials Beginning inventory 0 purchases 106000 available for use 106000 ending 15900 (.15*106,000) direct materials used 90100 Direct manufacturing labor 61500 Manufacturing overhead Indirect labor 15,800 other 118,000 manufacturing overhead 133800 manufaturing costs incurred 285400 plus beginning wip 0 costs to account for 285400 less ending wip 85620 (.3*285,400) cost of goods mnaufactured 199780 2. cost of goods sold beginning finished inventory 0 plus cost of goods manufactured 199780 cost of goods available fo sale 199780 less ending finished goods inventory 19978 (.1*199780) cost of goods sold 179802 answer:   179802

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