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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Exercises 2-45 and 2-46:

In September, Lauren Ashley Company purchased materials costing $200,000 and incurred direct labor cost of $120,000. Overhead totaled $325,000 for the month. Information on inventories was as follows:

Chapter 2, Problem 46E, Use the following information for Exercises 2-45 and 2-46: In September, Lauren Ashley Company

Exercise 2-46 Cost of Goods Sold

Refer to the information for Lauren Ashely Company above.

Required:

What was the cost of goods sold for September?

To determine

Calculate the amount of cost of goods sold in September.

Explanation

Cost of Goods Sold:

Cost of goods sold can be defined as the cost incurred in manufacturing the goods that are sold during a time period. It includes all direct costs such as direct material and labour cost and excludes all types of indirect expenses, such as selling and distribution expenses.

Use the following formula to compute the amount of cost of goods sold:

Cost of goods sold=(Cost of goods manufactured+Beginning finished goods inventoryEnding finished goods inventory)

Substitute $625,000 for the cost of goods manufactured, 70,000 for beginning finished goods inventory and 65,000 for ending finished goods inventory in the above formula

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