Compute the Cost of Goods Manufactured and Cost of Goods Sold for Strike MarineS

Question

Compute the Cost of Goods Manufactured and Cost of Goods Sold for Strike MarineStrike Marine Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials.

I'm having trouble understand what the Manufactoring overhead costs are. If anyone can just explain what that is and which ones they are from this problem that would be great.

Beginning End of End of of Year Year Year Raw materials inventory . . $ 22,000 $ 34,000 Insurance on plant Work in process inventory... $ 41,000 $ 27,000 Depreciation-plant building and equipment ...$ 12,600 Finished goods inventory....$ maintenance-plant .. . . . . .. . . . . $3,900 Purchases of direct materials Direct labor 13,000 21,000 Repairs and $ 88,000 General and administrative expenses .. . . $ 42,000 $ 24,500 aox . . . Print Done

Explanation / Answer

Calculate cost of goods manufactured :

Manufacturing overhead includes indirect manufacturing cost which is incurred in factory like indirect labour, indirect material, dep on plant and equipment in factory, factory rent, repairs and maintenance of factory etc.

so manufacturing overhead = (42000+9500+12600+3900) = 68000

Beginning work in process 41000 Plus : Manufacturing cost incurred Direct material used 62000 Direct labour 88000 Manufacturing overhead 68000 Total cost of work in process 259000 Less: Ending work in process inventory (27000) Cost of goods manufactured 232000

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