Question

Primare Corporation has provided the following data concerning last month’s manufacturing operations.

Purchases of raw materials	$	32,000
Indirect materials included in manufacturing overhead	$	4,760
Direct labor	$	60,000
Manufacturing overhead applied to work in process	$	88,600
Underapplied overhead	$	4,080

Inventories	Beginning		Ending
Raw materials	$	11,100	$	18,700
Work in process	$	54,000	$	66,200
Finished goods	$	33,900	$	42,800

Required:

1. Prepare a schedule of cost of goods manufactured for the month.

2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

Answer 1

Prepare cost of goods manufactured schedule :

Direct material used
Beginning raw material	11100
Raw material purchase	32000
Raw material available for use	43100
Less; Ending raw material	(18700)
Raw material transferred	24400
Less: Indirect material	(4760)
Direct material used		19640
Direct labour		60000
Factory overhead Applied		88600
Total manufacturing cost		168240
Beginning work in process		54000
Total cost of work in process		222240
Less: Ending work in process		(66200)
Cost of goods manufactured		156040

Prepare a schedule of cost of goods sold

Cost of goods sold
Beginning finished goods inventory	33900
Cost of goods manufactured	156040
Cost of goods available for sale	189940
Less: Ending finished goods inventory	(42800)
Unadjusted cost of goods sold	147140
Add: Under applied overhead	4080
Adjusted cost of goods sold		151220