Question

Cost Flow Relationships

The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils:

Sales	$433,840
Gross profit	252,930
Cost of goods manufactured	216,920
Indirect labor	94,140
Factory depreciation	14,320
Materials purchased	133,620
Total manufacturing costs for the period	249,460
Materials inventory, ending	17,790

Using the above information, determine the following missing amounts:

a. Cost of goods sold	$
b. Finished goods inventory at the end of the month	$
c. Direct materials cost	$
d. Direct labor cost	$
e. Work in process inventory at the end of the month	$

Answer 1

Question A

Calculation of Cost of Good Sold

Cost of Good Sold

=

Sales - Gross Profit

=

$433,840- $ 252,930

Cost of Good Sold

=

$ 180,910.00

Question B

Calculation of finished good inventory at the end of the month

Ending Finished Goods Inventory

=

Beginning Finished Goods Inventory + Cost of Good Manufactured-Cost of goods sold

=

$0 + $ 216,920 -$180,910

Ending Finished Goods Inventory

=

$   36,010.00

Question C

Calculation of Direct Material Cost

Direct Material Cost

=

Beginning Material Inventory + Inventory Purchases -Ending Material Inventory

=

$0 + 133,620 -$17,790

Direct Material Cost

=

$ 115,830.00

Question D

Calculation of Direct Labor Cost

Total Manufacturing cost for the period

=

Beginning Work in Process + Direct Material Cost + Indirect Labor +Factory Depreciation + Direct Labor Cost

$                                                   249,460.00

=

$0 + $115,830 + $ 94,140+ $ 14,320+ Direct Labor Cost

$                                                   249,460.00

=

$224,290 + Direct Labor Cost

Direct Labor Cost

=

$249,460-$224,290

Direct Labor Cost

=

$   25,170.00

Question E

Calculation of Work in Proces at the end of the month

Work in process at the end of the month

=

Beginning Work in Process + Total Manufacturing Cost -Cost of Goods Manufactured

=

$0 + $249,460- $ 216,920

Work in process at the end of the month

$   32,540.00

Since operation started in this month, so there is no begining balance for Material ,Work in Process and Finished Goods Inventory