Question

Timbuk 3 Company has the following information for March:

Cost of direct materials used in production $21,000

Direct labor 54,250

Factory overhead 35,000

Work in process inventory, March 1 87,500

Work in process inventory, March 31 92,750

Finished goods inventory, March 1 36,750

Finished goods inventory, March 31 42,000

For March,Determine (a) the cost of goods manufactured and (b) the cost of goods sold

 

 

 

Answer 1

Cost of Goods Manufactured : The cost of goods manufactured is the cost of producing a product that is ready for sale at the end of the accounting period.

Calculation of Goods Manufactured

Particulars	Amount$	Amount$
Work in progess inventory.March 1		87,500
Cost of direct materials used in production	21,000
Direct labor	54,250
Factory overhead	35,000
Total manufacturing cost incurred during march		110,250
Total manufacturing cost		197,750
Less : work in process inventory.March 31		92,750
Cost of goods manufactured		105,000

Calculation of Cost of Goods Sold

Particulars	Amount$	Amount$
Finished goods inventory, March 1		36,750
Cost of goods manufactured		105,000
Cost of finished goods available for use		141,750
Less : Finished goods inventory march 31		42,000
Cost of goods sold		99,750

 

(a)Therefore, the cost of goods manufactured is $105,000

(b)Therefore, the cost of goods sold is $99,750