Question

The Black Pepper Corporation desires to classify the cost and provides you the figure of trial balance for the period ended on December 31, 2016 as under: Rupees Material Consumed 30% of direct labour cost Factory overhead 60% of direct labour cost Finished goods – Beginning 49,000 Finished goods – Ending 68,000 Work in process – Beginning 42,000 Work in process – Ending 51,300 Materials – Beginning 29,500 Materials – Ending 25,810 Cost of goods manufactured 460,000

Required: Prepare Cost of Good Manufacture Statement

Answer 1

Let the direct labor cost be = K

Materials consumed = 30% of K

= 0.3K

Factory overhead = 60% of K

= 0.6K

Cost of goods manufactured = Materials consumed+direct labor + Factory overhead+ Work in process inventory, beginning - Work in process inventory, ending

460,000 = 0.3K+K+0.6K+42,000-51,300

1.9K = 469,300

K = 247,000

Direct labor cost = $247,000

Direct materials consumed = 30% of direct labor cost

= 247,000 x 30%

= $74,100

Factory overhead = 60% of direct labor cost

= 247,000 x 60%

= $148,200

Direct materials consumed = Raw materials, beginning + Raw materials purchase- Raw materials, ending

74,100 = 29,500+Raw materials purchase-25,810

Raw materials purchase = $70,410

Schedule of Cost of Goods Manufactured
Beginning raw material inventory	29,500
Purchase of raw material	70,410
Total raw materials available	99,910
Ending raw material inventory	-25,810
Raw material used	74,100
Direct labor	247,000
Factory overhead	148,200
Total Manufacturing Cost	469,300
Beginning work in process inventory	42,000
Ending work in process inventory	-51300
Cost of goods manufactured	$460,000

Kindly comment if you need further assistance.

Thanks‼!