Question

Tresme Incorporation incurred the following costs while manufacturing its product: Factory Supplies $28,000 Advertising expense $55,000 Direct materials used 180,000 Property taxes on plant 20,000 Depreciation on plant 80,000 Delivery expenses 15,000 Property taxes on store 9,500 Sales Commission 40,000 Direct labour costs 125,000 Sales clerks salaries 60,000 Additional Information: Raw materials was $60,000 at January 01 and $45,000 at December 31. Work in process inventory was $22,000 at January 01 and $30,500 at December 31.Finished goods inventory was $80,000 at January 01 and $55,600 at December 31. Required: a) Compute the Cost of Goods Manufactured. b) Compute the Cost of Goods Sold. c) Prepare the current assets section of the Balance Sheet at December 31.

Answer 1

Solution a:

Tresme Incorporation
Computation of Cost of goods manufactured
Direct material used		$180,000.00
Direct labor costs		$125,000.00
Manufacturing overhead:
Factory supplies	$28,000.00
Property taxes on Plant	$20,000.00
Depreciation on Plant	$80,000.00	$128,000.00
Manufacturing cost incurred		$433,000.00
Add: Beginning Work in process, Jan 1		$22,000.00
Less: Ending Work in process, Dec 31		$30,500.00
Cost of goods manufactured		$424,500.00

Solution b:

Tresme Incorporation
Computation of Cost of goods sold
Cost of goods manufactured	$424,500.00
Add: Beginning finished goods inventory	$80,000.00
Less: Ending finished goods inventory	$55,600.00
Cost of good sold	$448,900.00

Solution c:

Tresme Incorporation
Partial Balance Sheet
At December 31
Particulars	Amount
Current Assets:
Raw material	$45,000.00
Work in Process Inventory	$30,500.00
Finished Goods Inventory	$55,600.00