Question

Dave's Lighting Inc. produces lamps for the construction industry. During the year, the company incurred the following costs:

Factory Rent	$	80,000
Direct labor used		425,000
Factory utilities		50,000
Direct materials purchases		600,000
Indirect materials		150,000
Indirect labor		90,000

Inventories for the year were:

	January 1			December 31
Direct materials	$	100,000		$	75,000
Work in process		20,000			10,000
Finished goods		250,000			215,000

Required:

Prepare a statement of Cost of Goods Sold.

Answer 1

Schedule of Cost of goods Manufactured

Direct Materials:
Beginning raw material inventory	100,000
Add: Purchase of raw material	600,000
Total raw material available	700,000
Less: Ending raw material inventory	-75,000
Raw Material Used in Production		625,000
Direct labor		425,000
Factory overheads:
Indirect materials	150,000
Indirect labor	90,000
Factory utilities	50,000
Factory rent	80,000
Total Factory Overhead		370,000
Total manufacturing cost		1,420,000
Add Beginning work in process inventory		20,000
		1,440,000
Less: Ending work in process inventory		-10,000
Cost of Goods Manufactured		1,430,000

Schedule of Cost of Goods Sold

Finished goods beginning inventory	250,000
Cost of goods manufactured	1,430,000
Cost of Goods Available for Sale	1,680,000
Less: Finished goods ending inventory	-215,000
Cost of Goods Sold	$1,465,000

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