Question

Using the below information from Pennington Corp., prepare a schedule of cost of goods manufactured and a schedule of cost of goods sold. Assume Pennington closed underapplied or overapplied Overhead to Cost of Goods Sold.

Sales $500,000

Direct Labor $125,000

Raw Material Purchases $300,000

Selling Expense $ 30,000

Administrative Expenses $125,000

Man OH applied to WIP $145,000

Actual Man OH $150,000

Inventories:                     Beginning      Ending

Raw Materials                   $15,000        $16,000

Work in Process                $25,000       $15,000

Finished Goods                  $10,000        $12,000

Answer 1

Schedule of Cost of goods manufactured

Direct material
Beginning raw material	15000
Raw material purchase	300000
Raw material available for use	315000
Less: Ending raw material	-16000
Direct material used		299000
Direct labor		125000
Overhead applied		145000
Total manufacturing cost		569000
Beginning WIP		25000
Total Cost of work in process		594000
Less; Ending WIP		-15000
Cost of goods manufactured		579000

Schedule of Cost of goods sold

Beginning finished goods	10000
Cost of goods manufactured	579000
Cost of goods available for sale	589000
Less: Ending finished goods	-12000
Unadjusted Cost of goods sold	577000
Add: Under applied overhead	5000
Adjusted cost of goods sold	582000