Question

Cost Flow Relationships

The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils:

Sales	$332,400
Gross profit	193,790
Cost of goods manufactured	166,200
Indirect labor	72,130
Factory depreciation	10,970
Materials purchased	102,380
Total manufacturing costs for the period	191,130
Materials inventory, ending	13,630

Using the above information, determine the following missing amounts:

a. Cost of goods sold	$
b. Finished goods inventory at the end of the month	$
c. Direct materials cost	$
d. Direct labor cost	$
e. Work in process inventory at the end of the month	$

Answer 1

Answer :

a) Cost of goods sold = Sales - Gross profit

= 3,32,400 - 1,93,790

= $1,38,610

b) Finished goods inventory at the end of the month = Cost of goods manufactured - Cost of goods sold

= 1,66,200 - 1,38,610

= $27,590

c) Direct materials cost = Materials purchased - Materials inventory, ending

= 1,02,380 - 13,630

= $88,750

d) Total manufacturing cost = Direct materials cost + Direct labor cost + Indirect labor + Factory depreciation

1,91,130 = 88,750 + Direct labor cost + 72,130 + 10,970

Direct labor cost = 1,91,130 - 88,750 - 72,130 - 10,970

= $19,280

e) Work in process inventory at the end of the month = Total manufacturing cost - Cost of goods manufactured

= 1,91,130 - 1,66,200

= $24,930