Question

Damien Corporation incurred the following costs while manufacturing its product: Materials used in product $120,800 Advertising expense $45,350 Depreciation on plant 62,000 Property taxes on plant 19,100 Property taxes on warehouse 8,310 Delivery expense 21,000 Labour costs of assembly-line workers 110,600 Sales commissions 35,300 Factory supplies used 25,200 Salaries paid to sales clerks 50,100 Work in process inventory was $10,100 at January 1 and $14,100 at December 31. Finished goods inventory was $60,700 at January 1 and $50,800 at December 31. Calculate the cost of goods manufactured.

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Answer 1

Calculation of Cost of Goods Manufactured

Cost of Goods Manufactured =  Total Manufacturing Cost + Beginning WIP – Ending WIP

Manufacturing Cost = Direct Materials + Direct Labor + Manufacturing

Materials used in product = 1,20,800

Labour costs of assembly-line workers = 110,600

Manufacturing Overhead

Advertising Expense = 45,350

Depreciation on Plant = 62,000

Property Taxes on Plant     = 19,100

Factory Supplies    = 25,200

Total Manufacturing overhead    = 1,51,650

Manufacturing Cost = Direct Materials + Direct Labor + Manufacturing

= 1,20,800 + 1,10,600 + 1,51,650

= 3,83,050

Total Manufacturing Cost =   3,83,050

Begining WIP = 10,100

Closing WIP = 14,100

Cost of Goods Manufactured  =  Total Manufacturing Cost + Beginning WIP – Ending WIP

=  3,83,050 + 10,100 - 14,100

= 3,79,050

Notes

1. Selling expenses such as sales salaries, sales commissions, and delivery expense, and general and administrative expenses such as office salaries, and depreciation on office equipment, are all considered period costs. In a manufacturing company, these costs are often referred to as non-manufacturing costs.So These are not included while calculating manufacturing cost
2. Property Taxes on warehouse is not included while calculating manufacturing cost