Question

Cost Flow Relationships

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

Sales	$305,050
Gross profit	177,840
Cost of goods manufactured	152,530
Indirect labor	66,200
Factory depreciation	10,070
Materials purchased	93,960
Total manufacturing costs for the period	175,400
Materials inventory, ending	12,510

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

a. Cost of goods sold = Sales - Gross Profit = $305,050 - $177,840 = $127,210

b. Finished goods inventory at the end of the month = Cost of Goods Manufactured - Cost of Goods Sold = $152,530 - $127,210 = $25,320

c. Direct materials cost = Direct Materials Purchased - Materials Inventory = $93,960 - $12,510 = $81,450

d. Direct labor cost = Manufacturing Costs - Direct Materials - Indirect Labor - Depreciation = $175,400 - $81,450 - $66,200 - $10,070 = $17,680

e. Work in process inventory at the end of the month = Manufacturing Costs - Cost of Goods Manufactured = $175,400 - $152,530 = $22,870