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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

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 depreciation 26,400
Materials purchased 244,200
Total manufacturing costs for the period 455,400
Materials inventory, ending 33,000

Using the information given, determine the following missing amounts:

a. Cost of goods sold

b. Finished goods inventory at the end of the month

c. Direct materials cost

d. Direct labor cost

e. Work in process inventory at the end of the month

a)

To determine

Direct Material cost:

Direct material cost is the cost of the material which is directly involved in the production. It constitutes the major portion of the total cost of the finished product. For example: The cost of plastic is the direct material for manufacturing a bottle.

Direct Labor Cost:

Direct labor cost is the cost of the labor paid to the employees who are directly involved in converting the raw materials to the finished products. It constitutes the major portion of the total cost of the finished product. For example: Wages paid to the mechanic for repairing an automobile.

Cost of goods sold:

Cost of goods sold is the accumulated total of all direct costs incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

To determine: The cost of goods sold of Company B.

Explanation

Determine the cost of goods sold of Company B.

Particulars $ $
Sales   ...

b)

To determine
The finished goods inventory of Company B.

c)

To determine
The direct materials cost of Company B.

d)

To determine
The direct labor cost of Company B.

e)

To determine
The work in process inventory of Company B.

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