In: Accounting
Partridge, Inc. incurred the following costs during March:
Raw materials purchased $ 46,800
Direct labor (9,200 hours) 156,400
Manufacturing overhead (actual) 83,000
Selling expenses 47,400
Administrative expenses 32,600
Interest expense 14,800
Manufacturing overhead is applied on the basis of $8.50 per direct labor hour. Assume that overapplied or underapplied overhead is transferred to cost of goods sold only at the end of the year. During the month, 3,500 units of product were manufactured and 3,400 units of product were sold. On March 1 and March 31, Partridge carried the following inventory balances:
March 1 / March 31
Raw materials $ 14,200 $ 15,400
Work-in-process 64,700 55,800
Finished process 32,400 40,660
(a.) Prepare a Statement of Cost of Goods Manufactured for the month of March, and calculate the average cost per unit produced.
(b.) Calculate the cost of goods sold during March.
(c.) Where in the financial statements will the difference between cost of goods manufactured and cost of goods sold be classified?
Schedule of Cost of Goods Manufactured | ||
Beginning raw material inventory | $14,200 | |
Add: Raw material purchases | 46,800 | |
Raw material available | 61,000 | |
Less: Ending raw material inventory | (15,400) | |
Direct material used | 45,600 | |
Direct labor | 156,400 | |
Manufacturing overhead applied (9,200*$8.5) | 78,200 | |
Total manufacturing cost | $280,200 | |
Beginning work in process inventory | 64,700 | |
Ending work in process inventory | (55,800) | |
Cost of goods manufactured | $289,100 | |
Number of units manufactured | 3,500 | |
Average cost per unit produced | $82.6 |
b. Cost of goods sold:
Cost of goods manufactured | $289,100 |
Add: Beginning finished goods | 32,400 |
Cost of goods available for sale | 321,500 |
Less: Ending finished goods | (40,660) |
Cost of goods sold | $280,840 |
c.
The difference between cost of goods manufactured and cost of goods sold is ending finished goods inventory will be shown in inventories in assets side of balance sheet