Exercise 10-8 Allocating product costs between ending inventory and cost of good
ID: 2582182 • Letter: E
Question
Exercise 10-8 Allocating product costs between ending inventory and cost of goods sold LO 10-3
Vernon Manufacturing Company began operations on January 1. During the year, it started and completed 1,700 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs:
Raw materials purchased and used—$3,170.
Wages of production workers—$3,470.
Salaries of administrative and sales personnel—$1,935.
Depreciation on manufacturing equipment—$4,920.
Depreciation on administrative equipment—$1,775.
Vernon sold 1,120 units of product.
Required
Determine the total product cost for the year.
Determine the total cost of the ending inventory. (Do not round intermediate calculations.)
Determine the total of cost of goods sold. (Do not round intermediate calculations.)
Explanation / Answer
Raw materials purchased and used 3170 Wages of production workers 3470 Depreciation on manufacturing equipment 4920 Total product cost 11560 2 Total cost of the ending inventory = 11560/1700*580= 3944 3 Total of cost of goods sold = 11560/1700*1120= 7616
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