Question

7)Cornelius Company produces women’s clothing. During the year, the company incurred the following costs:

Factory rent	$	393,500
Direct labor		327,000
Utilities—factory		41,600
Purchases of direct materials		577,500
Indirect materials		73,650
Indirect labor		65,400

Inventories for the year were as follows:

	January 1			December 31
Materials	$	29,500		$	46,750
Work-in-Process		47,250			41,800
Finished Goods		144,000			79,950

Required:

1&2. Prepare a statement of cost of goods manufactured and calculate cost of goods sold.

Answer 1

Cornelius Company
Statement of Cost of Goods Manufactured
For the Year Ended
Direct Materials Used
Direct Materials Inventory, Beginning	29,500
Direct Materials Purchases	577,500
Total Direct Materials Available	607,000
Less : Direct Materials Inventory, Ending	(46,750)
Direct Materials Used		560,250
Direct labor		327,000
Factory Overhead
Utilities—factory	41,600
Indirect materials	73,650
Indirect labor	65,400
Total Factory Overhead		180,650
Total Manufacturing Costs Incurred during year		1,067,900
Work-in-Process Inventory, Beginning		47,250
Total Manufacturing Costs to Account for		1,115,150
Less : Work-in-Process Inventory, Ending		(41,800)
Cost of Goods Manufactured		$1,073,350

Calculation of Cost of goods sold.
Finished Goods Inventory, Beginning	144,000
Cost of Goods Manufactured	1,073,350
Total Goods Available for Sale	1,217,350
Less : Finished Goods Inventory, Ending	(79,950)
Cost of Goods Sold.	$1,137,400