Sharpland Industries is calculating its Cost of Goods Manufactured at year-end.

Question

Sharpland Industries is calculating its Cost of Goods Manufactured at year-end. Sharpland's accounting records show the following: The Raw Materials Inventory account had a beginning balance of $15,000 and an ending balance of $21,000. During the year, the company purchased $64,000 of direct materials. Direct labor for the year totaled $130,000, while manufacturing overhead amounted to S159,000. The Work in Process Inventory account had a beginning balance of $28,000 and an ending balance of $20,000. Assume that Raw Materials Inventory contains only direct materials. Compute the Cost of Goods Manufactured for the year. (Hint The first step is to calculate the direct materials used during the year.) Start by calculating the direct materials used during the year, Sharpland Industries Calculation of Direct Materials Used For Current Year Plus: Less: Direct materials used

Explanation / Answer

Direct material used = Beginning raw material inventory + Purchases - Ending raw material inventory

= 15000 + 64000 - 21000

= 58000

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