Question

Exercise 3-3 (Algo) Schedules of Cost of Goods Manufactured and Cost of Goods Sold [LO3-3]

Primare Corporation has provided the following data concerning last month’s manufacturing operations.

Purchases of raw materials	$	32,000
Indirect materials used in production	$	4,930
Direct labor	$	58,300
Manufacturing overhead applied to work in process	$	88,200
Underapplied overhead	$	4,160

Inventories	Beginning		Ending
Raw materials	$	10,100	$	19,700
Work in process	$	55,100	$	68,300
Finished goods	$	33,200	$	42,900

Required:

1. Prepare a schedule of cost of goods manufactured for the month.

2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

Answer 1

SOLUTION:

1. Preparation of a schedule of cost of goods manufactured for the month

Particulars	Amount in $	Amount in $
Direct materials:
Raw material - (Beginning)	10,100
Add: Purchase of raw material	32,000
Total raw material available	42,100
Less:Raw material - (Ending)	(19,700)
Raw material used in production	22,400
Less: Indirect materials included in manufacturing overhead	(4,930)	17,470
Direct labor		58,300
Manufacturing overhead applied to work-in-process		88,200
Total manufacturing cost		163,970
Add: Work-in-process (Beginning)		55,100
		219,070
Less:Work-in-process (Ending)		(68,300)
Cost of goods manufactured		150,770

2) Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

Particulars	Amount in $
Finished goods(Beginning)	33,200
Add: Cost of goods manufactured	150,770
Cost of goods available for sale	183,970
Less:Finished goods (Ending)	(42,900)
Cost of goods sold (Unadjusted)	141,070
Add: Underapplied overhead	4,160
Cost of goods sold (Adjusted)	145,230