Question

Use below information for Questions 1 to 3: For June 30th of 2017, Company X reported raw materials balance of TL20,500 and WIP balance of TL25,100 in its balance sheet. During July;

• Direct labor of TL257,000 was used.

• TL360,000 worth of raw materials was purchased.

• Manufacturing overhead used (exclusive of indirect materials) was equal to 61% of direct labor costs. At the end of July, ending work in process inventory was worth TL59,500. Totol cost of work in process equalled TL790,100. Sales totalled TL1,247,000 and gross profit was 41% of the sales. COGS available for sale equalled TL770,500.

Q-1) Calculate the balance of raw materials inventory as of July 31st.

Q-2) Calculate the COGM in July 31st.

Q-3) Calculate the balance of finished goods inventory as of July 31st. Use below

Answer 1

Answer 1):

Raw material issued = Total cost of work in process - (Beginning work in process + Direct labor + manufacturing overhead excluding indirect material)

= 790100 - (25100 + 257000 + 61% * 257000)

= TL 351,230

Balance of raw materials inventory as of July 31st = Beginning raw material inventory + Purchase - Raw material issued

= 20500 + 360000 - 351230

= TL 29,270

Balance of raw materials inventory as of July 31st = TL 29,270

Answer 2):

Cost of goods manufactured (COGM) = Cost of work in process - Ending work in process inventory

= 790100 - 59500

= TL 730,600

Cost of goods manufactured (COGM) =TL 730,600

Answer 3):

Cost of goods sold = Sales - Gross profit = 1247000 - 41% * 1247000 = TL 735,730

Balance of finished goods inventory as of July 31 = COGS available for sale - Cost of goods sold

= 770500 - 735730

=TL 34,770

Balance of finished goods inventory as of July 31 =TL 34,770