Question

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Crunchem Cereal Company incurred the following actual costs during 20x1.

Direct material used	$	270,000
Direct labor		130,000
Manufacturing overhead		273,000

The firm’s predetermined overhead rate is 210 percent of direct-labor cost. The January 1 inventory balances were as follows:

Raw material	$	31,000
Work in process		40,000
Finished goods		41,000

What was the cost of goods sold for the year?

Answer 1

Cost of goods sold	$664,900
Schedule of the cost of goods Manufactured for 20X1
Direct Material
Raw Materials inventory, Jan 01	$31,000
Raw Materials Purchases	$273,100
Raw materials available for use	$304,100
Less: Raw Materials inventory, Dec 31	$34,100
Direct material used		$270,000
Direct Labor		$130,000
Manufacturing overhead		$273,000
Total manufacturing costs		$673,000
Add: Work in process inventory, Jan 01		$40,000
Total cost of work in process		$713,000
Less: Work in process inventory, Dec 31		$44,000
Cost of goods manufactured		$669,000
Cost of goods sold
Finished-goods inventory, January 1		$41,000
Add: Cost of goods manufactured		$669,000
Cost of goods available for sale		$710,000
Deduct: Finished-goods inventory, December 31		$45,100
Cost of goods sold		$664,900