Question

In: Accounting

During its first year of operations, Motorola Company paid $11,860 for direct materials and $10,900 for...

During its first year of operations, Motorola Company paid $11,860 for direct materials and $10,900 for production workers' wages. Lease payments and utilities on the production facilities amounted to $9,900 while general, selling, and administrative expenses totaled $3,600. The company produced 7,100 units and sold 4,400 units at a price of $7.10 a unit.

What is Motorola's cost of goods sold for the year?

A. $20,240

B. $26,360

C. $16,336

D. $32,660

Solutions

Expert Solution

A. $20,240

Working:

Cost of goods sold is the direct cost of goods manufactured.It includes direct materials,direct labor and other cost directly attributable to the manufacturing of goods.

Step-1:Calculation of cost of goods manufactured

Direct Materials

$ 11,860

Production workers' wages

10,900

Lease payments and utilities on the production facilities

9,900

Cost of goods manufactured

32,660

Step-2:Calculation of Cost of goods manufactured per unit

Cost of goods manufactured

$ 32,660

/ Units manufactured

7100

Per unit cost of goods manufactured

$ 4.60

Step-3:Calculation of cost of goods sold

Cost of goods sold

Units sold x Manufacturing cost per unit

4,400

$ 4.60

$ 20,240

ekkarill92 answered 1 year ago

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