Question

1. Capital Co. has an Administrative building and a manufacturing plant. The following costs (assume all equipment is manufacturing) relate to one month’s activity for Capital Co.:

Indirect Labor	2,400
Rent (70% factory)	5,000
Equipment Repair	850
Direct Materials	5,600
Utilities(85% factory)	1,600
Direct Labor	9,000
Commissions	3,500
Advertising Expense	2,500
Applied MOH	8,900
Insurance expense (30% administrative)	1500
Administrative Costs	1,900
Beginning WIP	3,500
Ending WIP	3,800
Beginning Finished Goods	5,000
Ending Finished Goods	3,350

Required:

1. Prepare a schedule of Cost of Goods Manufactured in good form.
2. Determine the Cost of Goods sold for the month.

Answer 1

Solution:

Part a – Schedule of Cost of goods manufactured

Schedule of Cost of Goods Manufactured
	$$
Direct materials used in production	$5,600
Direct Labor Costs	$9,000
Applied Manufacturing Overhead	$8,900
Total Manufacturing Costs	$23,500
Plus: Beginning Inventory Work In Process	$3,500
Total cost of work in process	$27,000
Less: Ending Work in Process Inventory	($3,800)
Cost of Goods Manufactured	$23,200

Part b – Cost of goods sold for the month

Schedule of Cost of Goods Sold
	$$
Cost of Goods Manufactured (refer part a)	$23,200
Plus: Beginning Finished Goods	$5,000
Cost of goods available for sale	$28,200
Less: Ending finished goods	($3,350)
Cost of goods Sold	$24,850

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