The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils: Sales $792,000 Gross profit 462,000 Cost of goods manufactured 396,000 Indirect labor 171,600 Factory depreciation 26,400 Materials purchased 244,200 Total manufacturing costs for the period 455,400 Materials inventory, ending 33,000 Using the above information, determine the following missing amounts: a. Cost of goods sold $fill in the blank 1 b. Finished goods inventory at the end of the month $fill in the blank 2 c. Direct materials cost $fill in the blank 3 d. Direct labor cost $fill in the blank 4 e. Work in process inventory at the end of the month $fill in the blank 5
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Cost Flow Relationships
The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils:
| Sales | $792,000 |
| Gross profit | 462,000 |
| Cost of goods manufactured | 396,000 |
| Indirect labor | 171,600 |
| Factory |
26,400 |
| Materials purchased | 244,200 |
| Total |
455,400 |
| Materials inventory, ending | 33,000 |
Using the above information, determine the following missing amounts:
| a. Cost of goods sold | $fill in the blank 1 |
| b. Finished goods inventory at the end of the month | $fill in the blank 2 |
| c. Direct materials cost | $fill in the blank 3 |
| d. Direct labor cost | $fill in the blank 4 |
| e. Work in process inventory at the end of the month | $fill in the blank 5 |
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