Question

TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year.
Sales ..........................................................................$1,950
Raw materials inventory, beginning ..........................$50
Raw materials inventory, ending ................................$30
Purchases of raw materials ........................................$360
Direct labor ..................................................................$120
Manufacturing overhead ..........................................$175
Administrative expenses ............................................$100
Selling expenses ..........................................................$140
Work-in-process inventory, beginning .....................$50
Work-in-process inventory, ending ...........................$70
Finished goods inventory, beginning ......................$200
Finished goods inventory, ending ............................$105

Use these data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, elaborate on the relationship between these schedules as they relate to the flow of product costs in a manufacturing company.

Answer 1

Schdule of cost of goods manufactured :

Beginning work in process			50
Beginning raw material	50
Raw material purchase	360
Total raw material available for use	410
Less: Ending raw material	-30
Direct material used		380
Direct labour		120
Manufacturing overhead		175
Total manufacturing cost			675
Total Cost of work in process			725
Less: Ending work in process			-70
Cost of goods manufactured			655

Schedule of cost of goods sold

Beginning finished goods	200
Cost of goods manufactured	655
Total goods available for sale	855
Less; Ending finished goods	-105
Cost of goods sold	750