Question

1. Sheffield Corporation has the following cost records for June 2022.

Indirect factory labor		$5,200		Factory utilities		$460
Direct materials used		22,400		Depreciation, factory equipment		1,580
Work in process, 6/1/22		3,360		Direct labor		44,800
Work in process, 6/30/22		4,280		Maintenance, factory equipment		2,040
Finished goods, 6/1/22		5,600		Indirect materials		2,600
Finished goods, 6/30/22		8,400		Factory manager’s salary		3,360

(a) Prepare a cost of goods manufactured schedule for June 2022.

2. Blue Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Blue’s monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment		$12,000
Insurance on factory building		1,650
Raw materials used (plastics, polystyrene, etc.)		84,900
Utility costs for factory		930
Supplies for general office		350
Wages for assembly-line workers		58,300
Depreciation on office equipment		840
Miscellaneous materials (glue, thread, etc.)		1,230
Factory manager’s salary		5,800
Property taxes on factory building		430
Advertising for helmets		14,400
Sales commissions		10,120
Depreciation on factory building		1,660

(a) Prepare an answer sheet with the following column headings.

Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.

		Product Costs
Cost Item		Direct Materials		Direct Labor		Manufacturing Overhead		Period Costs
Rent on factory equipment		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Insurance on factory building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Raw materials		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Utility costs for factory		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Supplies for general office		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Wages for assembly line workers		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Depreciation on office equipment		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Miscellaneous materials		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Factory manager’s salary		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Property taxes on factory building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Advertising for helmets		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Sales commissions		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Depreciation on factory building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount		$enter a total amount

Answer 1

1. Cost of goods manufactured schedule for June 2022:

Cost of goods manufactured consists of the work in process at the beginning, added by direct materials used during the year, direct labor and manufacturing overhead during the year and reduced by work in process at the end. It gives the details about the cost of goods manufactured during the year.

2.

The product costs include the cost incurred for producing the product. It include, the cost of direct materials, direct labor and manufacturing overhead. Direct materials is the raw materials used for production process. Direct labor is the wages and salaries associated with the workers directly engaged in production function. Manufacturing overhead is concerned with all other expenses relating to production, but are not directly related with the production. It includes, indirect materials, indirect labor and other indirect expenses.
Period costs are such costs associated with the operations of the business, mainly includes, the selling and administrative expenses.