Question

ZHENGManufacturing had the following data for the period just ended:        

Work in process, Dec. 31	25,000
Finished goods, Jan. 1	60,000
Finished goods, Dec. 31	40,000
Direct materials used	120,000
Direct labor	220,000
Administration	68,000
Sales	800,000
Administrative expense	44,000
Other factory overhead	93,000
Indirect materials	19,000
Indirect labor	33,000
Work in process, January 1	10,000

Required:  Calculate ZHENG‘s  COGM and cost of goods sold (COGS).

Answer 1

1)
	COGM	$ 4,70,000
	Working;
	Work in process, January 1					$       10,000
	Costs incurred during the year:
	Direct Materials used				$ 1,20,000
	Direct Labor				$ 2,20,000
	Other Factory overhead				$     93,000
	Indirect Materials				$     19,000
	Indirect Labor				$     33,000	$   4,85,000
	Total manufacturing costs					$   4,95,000
	Less: Work in process, December 31					$       25,000
	Cost of goods manufactured (COGM)					$   4,70,000
2)
	COGS	$ 4,90,000
	Working:
	Finished goods, Jan 1					$       60,000
	COGM					$   4,70,000
	Cost goods available for sale					$   5,30,000
	Less:Finished Goods, Dec. 31					$       40,000
	Cost of goods sold (COGS)					$   4,90,000