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Computing Cost of Goods Manufactured

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Computing Cost of Goods Manufactured

Using the following information, compute cost of goods manufactured, which is the cost of
inventory transferred to Finished Goods Inventory.

Work-in-process inventory, beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $132,425
Work-in-process inventory, ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,300
Direct materials costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,080
Direct labor costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365,225
Actual manufacturing overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,200
Applied manufacturing overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285,900

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The cost of goods manufactured is calculated as
Opening Work in Process Inventory + Direct ...

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The solution explains how to calculate the Cost of Goods Manufactured.

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See Also This Related BrainMass Solution

The total manufacturing costs for the year were $683,000; the goods available for the sale totaled $740,000; and the cost of goods sold totaled $660,000.

Selected account balances for the year ended December 31 are provided below for Superior Company:
Selling and administrative salaries . . . . . . . . . . . . $110,000
Purchases of raw materials . . . . . . . . . . . . . . . . . . $290,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . $80,000
Manufacturing overhead . . . . . . . . . . . . . . . . . . . . $270,000
Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . $50,000

Inventory balances at the beginning and end of the year were as follows:
Beginning/End
Raw materials . . . . . . . . . . . . . . $40,000/$10,000
Work in process . . . . . . . . . . . . . ?/$35,000
Finished goods . . . . . . . . . . . . . $50,000/?
The total manufacturing costs for the year were $683,000; the goods available for sale totaled $740,000; and the cost of goods sold totaled $660,000.

Required:
1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company?s income statement for the year.

2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced
during the year. Compute the average cost per unit for direct materials used and the average
cost per unit for manufacturing overhead.

3. Assume that in the following year the company expects to produce 50,000 units and manufacturing overhead is fixed. What average cost per unit and total cost would you expect to be incurred for direct materials? For manufacturing overhead? (Assume that direct materials is a
variable cost.)

4. As the manager in charge of production costs, explain to the president the reason for any difference in average cost per unit between (2) and (3) above.

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