Question

E18-23 Statement of Cost of Goods Manufactured from Percent Relationships Information about Blue Line Products Company for the year ending December 31, 2017, follows: • Sales equal $475,000. • Direct materials used total $68,000. • Manufacturing overhead is 150 percent of direct labor dollars. • The beginning inventory of finished goods is 20 percent of the cost of goods sold. • The ending inventory of finished goods is twice the beginning inventory. • The gross profit is 20 percent of sales. • There is no beginning or ending work in process. Required Prepare a statement of cost of goods manufactured for 2017. (Hint: Prepare an analysis of changes in Finished Goods Inventory.)

Answer 1

BLUE LINE PRODUCTS COMPANY			Calculations
Statement of Cost of Goods Manufactured
For the Year Ending December 31, 2017
Current manufacturing costs:
Direct materials	68000
Direct labor	155200		=(456000-68000)/(100%+150%)
Manufacturing overhead	232800	456000	=155200*150%
Beginning work-in-process		0
Total costs in process		456000
Ending work-in-process		0
Cost of goods manufactured		456000
Analysis of Finished Goods Inventory:
Finished goods, 1/1/17		76000	=380000*20%
Cost of goods manufactured		456000	=532000-76000
Total goods available for sale		532000	=380000+152000
Finished goods, 12/31/17		152000	=76000*2
Cost of goods sold		380000	=475000*(1-20%)