Question

3.Smith Corporation has provided the following data for the month of December:

Inventories:	Beginning		Ending
Raw materials	$	25,500	$	21,500
Work in process	$	17,500	$	10,500
Finished Goods	$	48,500	$	56,500

Additional information:

Raw materials purchases	$	72,500
Direct labor cost	$	92,500
Manufacturing overhead cost incurred	$	42,550
Indirect materials included in manufacturing overhead cost incurred	$	4,050
Manufacturing overhead cost applied to Work in Process	$	41,500

Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold.

Required:

Prepare a Schedule of Cost of Goods Manufactured (8points) and a Schedule of Cost of Goods Sold (8 points).

Answer 1

Statement of cost of goods manufactured

Raw material beginning inventory	25,500
Purchases	72,500
Raw material available	98,000
Raw material ending inventory	-21,500
Direct material used	76,500
Direct labor cost	92,500
Manufacturing overhead cost applied to Work in Process	41,500
Total manufacturing cost	210,500
Work in process, beginning	17,500
Work in process, ending	-10,500
Cost of goods manufactured	217,500

Cost of goods manufactured = $217,500

Under applied manufacturing overhead = Manufacturing overhead cost incurred - Manufacturing overhead cost applied to Work in Process

= 42,550 - 41,500

= $1,050

Schedule of cost of goods sold

Finished Goods beginning inventory	48,500
Cost of goods manufactured	217,500
Cost of goods available for sale	266,000
Finished Goods ending inventory	-56,500
Unadjusted cost of goods sold	209,500
Under applied manufacturing overhead	1,050
Adjusted cost of goods sold	$210,550

cost of goods sold = $210,550