Question

Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $154,000 and at the end of the month was $148,000. The cost of goods manufactured for the month was $302,000. The actual manufacturing overhead cost incurred was $97,000 and the manufacturing overhead cost applied to Work in Process was $85,000.

The beginning balance in the raw materials inventory account was $88,000 and the ending balance was $35,000. Raw materials purchased during the month totaled $71,000 and $5000 of the manufacturing overhead cost incurred during the month consisted of raw materials classified as indirect materials.

So, What is the adjusted cost of goods sold that would appear on the income statement in July?

and what was the direct materials cost for July?

Answer 1

1)	FG inventory, beginning	154000
	Cost of goods manufactured	302000
	Cost of goods available for sale	456000
	FG inventory, ending	148000
	Cost of goods sold (unadjusted)	308000
	Add: Mfg OH underapplied = 97000-85000 =	12000
	Adjusted cost of goods sold in July	320000
2)	Raw materials inventory, beginning	88000
	Cost of raw materials purchased	71000
	Total raw materials available	159000
	Raw materials inventory, ending	35000
	Cost of materials used	124000
	Indirect materials	5000
	Direct materials cost for July	119000