Concept explainers
Glasson Manufacturing Co. produces only one product. You have obtained the following information from the corporation’s books and records for the current year ended December 31, 2016:
- a. Total
manufacturing cost during the year was $1,000,000, including direct materials, direct labor, and factory overhead. - b. Cost of goods manufactured during the year was $970,000.
- c. Factory Overhead charged to Work in Process was 75% of direct labor cost and 27% of the total manufacturing cost.
- d. The beginning Work in Process inventory, on January 1, was 40% of the ending Work in Process inventory, on December 31.
- e. Material purchases were $400,000 and the ending balance in Materials inventory was $60,000. No indirect materials were used in production.
Required:
Prepare a statement of cost of goods manufactured for the year ended December 31 for Glasson Manufacturing. (Hint: Set up a statement of cost of goods manufactured, putting the given information in the appropriate spaces and solving for the unknown information.)
Prepare the statement of cost of goods manufactured for the year ended December 31 for Company G.
Explanation of Solution
Cost of goods manufactured: Cost of goods manufactured refers to the cost incurred for a making a product, that are available for sales at the end of the accounting period.
Prepare the statement of cost of goods manufactured for the year ended December 31 for Company G.
Company G | ||
Statement of cost of goods manufactured | ||
For the year ended December 31 | ||
Particulars | Amount in $ | Amount in $ |
Direct materials: | ||
Inventory, January 1 (8) | 30,000 | |
Add: Purchase | 400,000 | |
Total cost of available materials | 430,000 | |
Less: Inventory, December 31 | 60,000 | |
Cost of materials used | 370,000 | |
Less: Indirect materials used | 0 | |
Cost of direct materials used in production (3) | 370,000 | |
Direct labor (2) | 360,000 | |
Factory Overhead (1) | 270,000 | |
Total manufacturing cost | 1,000,000 | |
Add: work in process inventory, January 1 (6) | 20,000 | |
1,020,000 | ||
Less: Work in process inventory, December 31 (5) | 50,000 | |
Cost of goods sold manufactured | 970,000 |
(Table 1)
Working note 1: Calculate the amount of factory overhead.
Working note 2: Calculate the amount of direct labor.
Working note 3: Calculate the amount of direct material used.
Working note 4: Calculate the amount of direct material used.
Working note 5: Calculate the ending work in process.
Ending work in process is considered as “X”.
Working note 6: Calculate the beginning work in process.
Working note 7: Calculate the total cost of available materials.
Working note 8: Calculate the beginning materials of inventory.
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Chapter 1 Solutions
PRINCIPLES OF COST ACCOUNTING
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