Question

Baltimore Manufacturing Company just completed its year ended December 31, 2019. Depreciation for the year amounted to $240,000: 25% relates to sales, 20% relates to administrative facilities, and the remainder relates to the factory. Of the total units produced during FY 2019: 90% were sold in 2019 and the rest remained in finished good inventory. Use this information to determine the dollar amount of the total depreciation that will be contained in Cost of Goods Sold.  (Round dollar values & enter as whole dollars only.)

Answer 1

All cost incurred to manufacture a product or all cost incurred till factory point is a part of product cost thus depreciation relating to factory forms a part of product cost .

Depreciation = 100 -25 -20 =55% relates to factory

Amount of depreciation relating to units produced = 240000 * 55%= 132000

the dollar amount of the total depreciation that will be contained in Cost of Goods Sold= Amount of depreciation relating to units produced * % of units sold

                  = 132000 * 90%

                 = 118800