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Cost of goods manufactured/sold

Jansen company has a job order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor cost. The information below has been taken from the cost records of the Jansen company for the past year:

Direct materials use in production $1250
Total manufacturing costs charged to production during the year $6050
(includes direct materials, direct labor and applied factory
Manufacturing overhead applied $2800
Selling and administrative expenses $1000
Direct materials, January 1 $130
Direct materials December 31 $80
Work in process January 1 $250
Work in process December 31 $400
Finished good January 1 $300
Finished goods December 31 $200

a- Compute the cost of direct materials purchased during the year
b- Compute the predetermined overhead rate that was used during the past year
c- Compute the Cost of Goods manufactured for the past year
d- Compute the Cost of Goods Sold for the past year

Solution Preview

a- Compute the cost of direct materials purchased during the year

Direct material used = Opening direct material inventory + Purchases - Ending Direct material inventory
1,250 = 130 + Purchases - 80
Cost of direct materials purchased = 1,250+80-130 = $1,200

b- Compute the ...

Solution Summary

The solution explains how to calculate the amount of cost of goods manufactured and cost of goods sold.