Question

The following information is available for the first year of operations of Engle Inc., a manufacturer of fabricating equipment:

Sales	$1,032,500
Gross profit	278,800
Indirect labor	92,900
Indirect materials	38,200
Other factory overhead	17,600
Materials purchased	526,600
Total manufacturing costs for the period	1,139,900
Materials inventory, end of period	38,200

Using the above information, determine the following missing amounts:

a. Cost of goods sold
b. Direct materials cost
c. Direct labor cost

Answer 1

a) Calculation of Cost of goods sold:

COGS = Sales-Gross profit

= 1,032,500-278,800

= 753,700

b) Calculation of Direct Material Cost:

Material purchased	526,600
Less: Material inventory, end of period	38,200
Less: Indirect material	38,200
Direct Material cost	450,200

c) Calculation of Direct Labor Cost:

Total Manufacturing cost for the period	1,139,900
Less: Direct material cost	450,200
Less: Factory overhead (92,900+38,200+17,600)	148,700
Direct labor cost	541,000