Question

In: Accounting

Cost Flow Relationships The following information is available for the first year of operations of Creston...

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 $

Solutions

Expert Solution

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

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