Question

The following balances are from the accounts of Crabtree Machining Company:

	January 1 (Beginning)			December 31 (Ending)
Direct materials inventory	$	98,500		$	110,700
Work-in-process inventory		107,200			105,100
Finished goods inventory		43,100			46,400

Direct materials purchased during the year amount to $513,400, and the cost of goods sold for the year was $1,870,000.

Required:

Prepare a cost of goods sold statement.

CRABTREE MACHINING COMPANY Cost of Goods Sold Statement For the Year Ended December 31 Beginning work-in-process inventory $107,200 Manufacturing costs: Direct materials: Beginning inventory $98,500 Purchases 513,400 Materials available $611,900 Less: Ending inventory 110,700 Direct materials used $501,200 Other manufacturing costs Total manufacturing costs 501,200 Total costs of work-in-process $608,400 Less: Ending work-in-process 105,100 Cost of goods manufactured $503,300 Beginning finished goods inventory 43,100 Finished goods available for sale $546,400 Less: Ending finished goods inventory 46,400 Cost of goods sold $500,000

************I HAVE FIGURED OUT EVERY NUMBER BESIDES THE OTHER MANUFACTURING COST!!!! HOW DO I FIGURE OUT THAT NUMBER???????????????????? ONCE I FIGURE OUT THAT NUMBER IT WILL CHANGE THE OTHER NUMBERS, SO THE PROBLEM WILL BE CORRECT.

Answer 1

• All workings forms part of the answer
• You see that the question already mentions the value of COST OF GOODS SOLD.
• The value of ‘Other manufacturing cost’ is to be computed.
• The summarised general Equation to calculate Cost of Goods Sold is:

Beginning Inventories (all)	+	Direct Material purchased	+	Other manufacturing costs	-	Ending Inventories (all)	=	Cost of Goods Sold
(Values available, computed below)		(Values available)		(TO BE CALCULATED)		(Values available, computed below)		(Values available)

• Calculation of values for above equations

Beginning Inventories:
Direct Material	$           98,500.00
WIP Inventory	$        107,200.00
Finished Goods	$           43,100.00
Total	$        248,800.00

Ending Inventories:
Direct Material	$        110,700.00
WIP Inventory	$        105,100.00
Finished Goods	$           46,400.00
Total	$        262,200.00

Direct Material purchased

$        513,400.00

Cost of Goods Sold

$     1,870,000.00

• Equation formulated for calculation of ‘Other manufacturing cost’

Equation:	Beginning Inventories	+	Direct Material purchased	+	Other manufacturing costs	-	Ending Inventories	=	Cost of Goods Sold
Hence,	Other manufacturing costs	=	Ending Inventories	+	Cost of Goods Sold	-	Beginning Inventories	-	Direct Material purchased
	Other manufacturing costs	=	$                                     262,200.00	+	$          1,870,000.00	-	$           248,800.00	-	$           513,400.00
	Other manufacturing costs	=	$                                                                                                                                                                                                                                                1,370,000.00

• Hence, “Other manufacturing Cost” = $ 1,370,000
• Now, to see if above answer for Other Manufacturing cost is correct, we put this value in the given schedule and resultant figure of Cost of Goods Sold SHOULD BE EQUAL to $ 1,870,000.00
• Schedule of Cost of Goods Sold

CRABTREE MACHINING COMPANY
Cost of Goods Sold Statement
For the Year Ended December 31
Beginning work-in-process inventory			$              107,200.00
Manufacturing costs:
Direct materials:
Beginning inventory	$                                       98,500.00
Purchases	$                                     513,400.00
Materials available	$                                     611,900.00
Less: Ending inventory	$                                     110,700.00
Direct materials used		$                501,200.00
Other manufacturing costs [calculated above]		$            1,370,000.00
Total manufacturing costs			$          1,871,200.00
Total costs of work-in-process			$          1,978,400.00
Less: Ending work-in-process			$              105,100.00
Cost of goods manufactured			$          1,873,300.00
Beginning finished goods inventory			$                43,100.00
Finished goods available for sale			$          1,916,400.00
Less: Ending finished goods inventory			$                46,400.00
Cost of goods sold			$          1,870,000.00