Question

Under applied over head
14,000
Finished goods inventory, beginning
310,000
Finished goods inventory, ending
380,000
Raw materials inventory, beginning
110,000
Raw materials inventory, ending
95,000
Work in process inventory, beginning
105,000
Work in process inventory, ending
85,000
Selling expenses
180,000
Manufacturing overhead Applied
490,000
Direct labor
390,000
Administrative expenses
385,000
Purchases of raw materials
295,000
Sales
2,885,000



Required:

1) Prepare a schedule of Cost of Goods Sold for the year in good form? (Use the table given in the answer box.

Based on the Cost of Goods schedule you prepared identify:
2a) The Product Costs

Based on the Cost of Goods schedule you prepared identify:
2b) The Period costs

Answer 1

1) schedule of cost of goods sold

Raw material at the beginning=110000

(+) Purchases= 295000

(-)raw material at the end=. 95000

=m Direct material consumed =310000

(+)Direct labour =390000

PRIME COST=700000

+

Manufacturing overhead applied=490000

+underapplied overhead. =14000

GROSS WORKS COST =1204000

(+)Opening wip =105000

(-)closing wip =85000

WORKS COST=1224000

+Administrative expenses=385000

COST OF PRODUCTION =1609000

(+) Opening finished goods=310000

(-) closing finished goods=380000

= COST OF GOODS SOLD=1539000

2) a)Product cost refers to the costs incurred to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. Product cost can also be considered the cost of the labor required to deliver a service to a customer.

here product costs are=direct material + direct labor + factory overhead

Ie.,1190000

2B)A period cost is any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A period cost is more closely associated with the passage of time than with a transactional event. ... Examples of period costs are: Selling expenses. Advertising expenses.

Therefore here product costs are under applied over heads and selling expenses

14000+180000=194000