Question

Cost Flow Relationships

The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment:

Sales	$909,300
Gross profit	245,500
Indirect labor	81,800
Indirect materials	33,600
Other factory overhead	15,500
Materials purchased	463,700
Total manufacturing costs for the period	1,003,900
Materials inventory, end of period	33,600

Using the above information, determine the following amounts:

c. Direct labor cost

$

Answer 1

Answer:

a. Cost of Goods sold
Genreally cost of goods sold = Opening inventory +Purchase during the year -closing inventory
or
COGS = Sales - Gross profit
It will be calculated as follows:
Particulars	Amount $
Sales	909300
Less: Gross Profit	245500
Cost of goods sold	663800
b. Direct Material Cost:
Particulars	Amount $
Materials purchased	463700
Less: Indirect materials	-33600
Less: Materials inventory	-33600
Direct materials cost	396500
c. Direct Labor Cost:
Particulars	Amount $
Total manufacturing costs for the period	1003900
Less: Direct materials cost	-396500
Less: Other factory overhead	-15500
Less: Indirect labor	-81800
Direct labor cost	510100