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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 2-47 through 2-49.

Jasper Company provided the following information for last year:

Chapter 2, Problem 47E, Use the following information for Exercises 2-47 through 2-49. Jasper Company provided the following

Last year, beginning and ending inventories of work in process and finished goods equaled zero.

Exercise 2-47 Cost of Goods Sold, Sales Revenue, Income Statement

Refer to the information for Jasper Company on the previous page.

Required:

Calculate the cost of goods sold for last year.

To determine

Calculate the amount of cost of goods sold for the previous year.

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 $795,000 for the cost of goods manufactured, $0 for beginning finished goods inventory and $0 for ending finished goods inventory in the above formula.

Cost of goods sold=$795,000+$0$0=$795,000

Therefore, the amount of cost of goods sold is $795,000

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