Question

The Solar Clothing Company (SCC) experienced growth in the spring of 2018 as consumer interest in solar clothing soared. To accommodate increasing demand, SCC wants to develop plans for expansion. First, however, SCC needs to determine the cost of goods sold for an average sales period to calculate gross profit margin. Use the SCC cost information below to calculate the cost of goods sold for July 2018.

SCC Cost Information for July 2018

Direct Materials Inventory	July 1, 2018	$1,250,000
Direct Labor		$775,000
Work in Process Inventory	July 1, 2018	$525,000
Finished Goods Inventory	July 1, 2018	$950,000
Direct Materials Purchased		$2,750,000
Factory Overhead		$650,000
Direct Materials Inventory	July 31, 2018	$700,000
Work in Process Inventory	July 31, 2018	$500,000
Finished Goods Inventory	July 31, 2018	$850,000

Answer 1

--Cost of Goods Sold for Jul 2018 = $ 1,550,000 Answer

--Working

Finished Goods Inventory - Jul 1	$950,000
Cost of Goods manufactured [see below]	$1,450,000
	$2,400,000
Finished Goods Inventory - Jul 31	($850,000)
Cost of Goods Sold	$1,550,000 Answer

Direct material - Jul 1	$1,250,000
Direct Materials Purchased	$2,750,000
Direct material - Jul 31	($700,000)
Direct material cost		$3,300,000
Direct Labor		$775,000
Factory Overhead		$650,000
Total manufacturing cost		$1,425,000
WIP Inventory - Jul1		$525,000
		$1,950,000
WIP Inventory - Jul 31		($500,000)
Cost of Goods manufactured		$1,450,000