Question

Classic Sound is a start-up company that produces vinyl records for numerous record labels worldwide. The company has two full-time employees working in the production department while the CEO splits her time 80/20% between developing new business and overseeing the production process. Information taken from the accounting records for the first three months of operations is shown below.

Beginning raw materials inventory	$	0
Purchases of raw materials		55,500
Ending raw materials inventory		27,750
Direct labour		44,950
Manufacturing overhead		33,850
Beginning work in process inventory		0
Ending work in process inventory		6,100
Purchase of production equipment		155,000
Rent for production facility		10,650

Required:

1. Prepare a schedule of cost of goods manufactured for the company for the month. (Do not leave any empty spaces; input a 0 wherever it is required.)

2. What types of expenses are likely included in the total manufacturing overhead cost of $33,850 incurred for the first three months of operation? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

• Selling expenseunanswered
• Administrative expenseunanswered
• Ending work in process inventoryunanswered
• Rent for the production facilityunanswered
• Depreciation on the production equipmentunanswered
• Insurance on the production equipmentunanswered
• Indirect materials used in producing recordsunanswered
• Indirect labour related to the CEO's supervision of the production process (20% of her time).unanswered

Answer 1

a)We know the formula for arriving the cost of goods sold as below

Cost of goods manufactured = Opening inventory+Purchased made during the year-closing inventory

Given,

Opening invenotyr $ 0

Purcahses of raw material 55,500

Ending raw material = 27,750

Therefore by applying the above formula we will get

=0+55,500-27,750

=27,750

We wil add direct labour and manufacturing overheads to the above to arrive at the cost of goods manufactured

=27750+44950+33850

=1,06,550.

b)Manufacturing overheads includes

Rent for the production facility

Depreciation on the production equipment

Insurance on the production equipment

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