Question

During December, Kenley Ryan Corp’s:

Purchase of direct materials totaled $313,000;

Direct labor for the month was 10,000 hours at $25.00 per hour.

Kenley Ryan also incurred the following overhead costs:

Utilities, 115,000

Supervision, 74,000,

Indirect materials, 26,000

Depreciation, 248,000,

Insurance 62,000

Miscellaneous 55,000.

Beginning inventory accounts were as follows:

Materials Inventory, 60,000

Work in Process Inventory, 8,000

Finished Goods Inventory 15,000

Ending inventory as follows:

Materials Inventory, 78,000

Work in Process Inventory, 9,000

Finished Goods Inventory 12,500.

Prepare a statement of cost of goods manufactured and the cost of goods sold section of the income statement.

Answer 1

Statement of Cost of goods manufactured
Beginning Work in Process Inventory			8,000
Direct raw materials used :
Material Inventory - Beginning	60,000
Add: Material Purchases	3,13,000
Total materials available	3,73,000
Less: Material Inventory, Ending	-78,000
Direct materials used in production		2,95,000
Direct labor ( 10,000 Hours x $ 25 )		2,50,000
Manufacturing overhead :
- Utilities	1,15,000
- Supervision	74,000
- Indirect materials	26,000
- Depreciation	2,48,000
-   Insurance	62,000
- Miscellaneous	55,000
Total Manufacturing Overhead		5,80,000
Total Manufacturing costs			11,25,000
Total cost of work in process			11,33,000
Less: Ending Work in Process Inventory			-9,000
Cost of goods manufactured			11,24,000

Statement of Cost of goods Sold
Beginning Finished goods inventory	15,000
Add: Cost of goods manufactured	11,24,000
Cost of Goods available for use	11,39,000
Less: Ending Finished goods inventory	-12,500
Cost of Goods sold	11,26,500