Question

Cornelius Company produces women’s clothing. During the year, the company incurred the following costs:

Factory rent	$	386,000
Direct labor		312,000
Utilities—factory		39,600
Purchases of direct materials		565,000
Indirect materials		69,400
Indirect labor		62,400

Inventories for the year were as follows:

	January 1			December 31
Materials	$	27,000		$	43,000
Work-in-Process		46,000			40,800
Finished Goods		139,000			77,200

Required:

1&2. Prepare a statement of cost of goods manufactured and calculate cost of goods sold.

Cornelius Company
Statement of Cost of Goods Manufactured
For the Year Ended December 31
Direct materials
Materials available
Materials used
Factory overhead
Total factory overhead
Total manufacturing costs
Total manufacturing costs to account for
Cost of goods sold
Cost of goods available for sale
Cost of goods sold

Answer 1

Schedule of Cost of Goods Manufactured
Direct Materials
Beginning materials inventory	27000
Materials purchase	565000
Materials available	592000
Less: Ending materials inventory	43000
Materials used		549000
Direct Labor		312000
Factory overhead
Factory rent	386000
Utilities- Factory	39600
Indirect materials	69400
Indirect Labor	62400
Total factory overheads		557400
Total Manufacturing Costs		1418400
Add: Beginning work in process inventory		46000
Total manufacturing costs to account for		1464400
Less: Ending work in process inventory		40800
Cost of Goods Manufactured		1423600
Cost of goods sold
Beginning finished goods inventory		139000
Cost of Goods Manufactured		1423600
Cost of goods available for sale		1562600
Less: Ending finished goods inventory		77200
Cost of goods sold		1485400