Question

Exercise 10-14 Cost of goods manufactured and sold LO 10-5 The following information pertains to Flaxman Manufacturing Company for March 2018. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $ 125,000 Work in process 118,900 Finished goods 77,200 March 31 Inventory balances Raw materials $ 86,700 Work in process 146,200 Finished goods 80,500 During March Costs of raw materials purchased $ 119,000 Costs of direct labor 101,900 Costs of manufacturing overhead 62,700 Sales revenues 359,000 Required Prepare a schedule of cost of goods manufactured and sold. Calculate the amount of gross margin on the income statement.

Answer 1

Prepare a schedule of cost of goods manufactured and sold.

Beginning work in process			118900
Beginning raw material	125000
Raw material purchase	119000
Less: Ending raw material	-86700
Direct material used		157300
Direct labour		101900
Manufacturing overhead		62700
Total manufacturing cost			321900
Total cost of work in process			440800
Less: Ending work in process			-146200
Cost of goods manufactured			294600
Beginning finished goods inventory			77200
Total cost of goods available for sale			371800
Less: Ending finished goods inventory			-80500
Cost of goods sold			291300

Calculaate gross margin :

Gross margin = Sales-Cost of goods sold

= 359000-291300

Gross margin = 67700