Question

Gibson Manufacturing Company began operations on January 1. During the year, it started and completed 1,750...

Gibson Manufacturing Company began operations on January 1. During the year, it started and completed 1,750 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs:

  1. Raw materials purchased and used—$3,220.
  2. Wages of production workers—$3,570.
  3. Salaries of administrative and sales personnel—$1,940.
  4. Depreciation on manufacturing equipment—$5,285.
  5. Depreciation on administrative equipment—$1,760.


Gibson sold 1,040 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.)

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Answer #1

Answer- The total product cost for the year = $12075.

Explanation- Total product cost = Raw materials purchased and used+ Wages of production workers+ Depreciation on manufacturing equipment

= $3220+$3570+$5285

= $12075

The total cost of the ending inventory = $4899.

Explanation- Total cost of ending inventory = Closing inventory units*Unit product cost

= (1750 units-$1040 units)*$6.9 per unit

= $4899

Where- Unit product cost= $12075/1750 units

=$6.9 per unit

The total of cost of goods sold = $7176.

Explanation= Cost of goods sold= Sales units*Unit product cost

= 1040 units*$6.9 per unit

= $7176

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