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Cost of Goods Manufactured and Sold

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Bodin Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the following inventories at the beginning and end of the month of January.

January 1 January 31
Finished goods $125,000 $117,000
Work in process 233,000 251,000
Raw material 133,000 124,000

The following additional data pertain to January operations.

Raw material purchased $192,000
Direct labor 350,000
Actual manufacturing overhead 165,000
Actual selling and administrative expenses 110,000

The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost. Any overapplied or underapplied manufacturing overhead is accumulated until the end of the year.


1. Compute the company's prime cost for January.

Prime cost $

2. Compute the total manufacturing cost for January.

Total manufacturing cost $

3. Compute the cost of goods manufactured for January.
Cost of goods manufactured $

4. Compute the cost of goods sold for January.

Cost of goods sold $

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Solution Summary

This solution illustrates how to compute the cost of manufactured one component at a time, and how to compute the cost of goods sold.

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1. Compute the company's prime cost for January.

Prime cost $551,000

Prime cost = Direct labor + Direct materials
Prime cost = Direct labor + (Beginning raw materials + Raw materials purchased - Ending raw materials inventory)
Prime cost = $350,000 + ($133,000 + $192,000 - $124,000)
Prime cost = ...

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