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    Cost of goods manufactured/sold

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    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

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    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.