Generic Motors is a manufacturing firm. Its beginning inventory of materials was $1,000, purchases of materials $20,000, ending inventory of materials $1,500.

Its beginning inventory of work-in-process (WIP) was $5,000, ending inventory of WIP was $6,700.

Its cost of direct labor was $12,000, manufacturing overhead $11,000.

Its beginning inventory of finished goods was $3,000, ending inventory of finished goods was $1,300.

Required:

a) What was the cost of materials used?

b) What was the cost of goods manufactured (COGM) ?

c) What was the cost of goods sold (COGS) ?

Instructions are listed below.

Explanation:

Giving the following information:

Direct material:

beginning inventory = $1,000

purchases = $20,000

ending inventory = $1,500.

beginning inventory of work-in-process (WIP) was $5,000

ending inventory of WIP was $6,700.

Its cost of direct labor was $12,000, manufacturing overhead $11,000.

Its beginning inventory of finished goods was $3,000, the ending inventory of finished goods was $1,300.

A) Direct material used = beginning inventory + purchases - ending inventory

DM used = 1,000 + 20,000 - 1,500 = 19,500

B) cost of goods manufactured = beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured = 5,000 + 19,500 + 12,000 + 11,000 - 6,700 = $40,800

C) COGS = beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS = 3,000 + 40,800 - 1,300 = $42,500