Question

Gibson Manufacturing Company began operations on January 1. During the year, it started and completed 1,600 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs:

1. Raw materials purchased and used—$3,110.
2. Wages of production workers—$3,490.
3. Salaries of administrative and sales personnel—$1,935.
4. Depreciation on manufacturing equipment—$4,280.
5. Depreciation on administrative equipment—$1,770.

Gibson sold 1,080 units of product.

Required

1. Determine the total product cost for the year.

2. Determine the total cost of the ending inventory. (Do not round intermediate calculations.)

3. Determine the total of cost of goods sold. (Do not round intermediate calculations.)

Answer 1

ANSWER:-

Total Product Cost = Raw Material Purchased and Used + Wages of Production Workers + Depreciation on Manufacturing Equipment
Total Product Cost = $3,110 + $3,490 + $4,280
Total Product Cost = $10,880

Cost per Unit = Total Product Cost / No. of Units Produced
Cost per unit = $10,880 / 1,600
Cost per unit = $6.8

Cost of Goods Sold = No. of Unit Sold * Cost per unit
Cost of Goods Sold = 1,080 * $6.8
Cost of Goods Sold = $7,344

Cost of Ending Inventory = Total Product Cost – Cost of Goods Sold
Cost of Ending Inventory = $10,880 - $7,344
Cost of Ending Inventory = $3,536

1. Total Product Cost= $10,880

2. Cost of ending cost = $3,536

3. Cost of goods sold = $7,344