Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials.

Question

Business

Virginia Nolan

30 July, 13:55

Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials.

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Brandy · Answer 1

All figures are imaginary.

Explanation:

West Nautical Company

Cost of Goods Manufactured (in millions). and Sold

Dr Cr

(000) (000)

Direct Materials (opening Inventory) 30,000

Add Purchases 10,000

Less Ending Inventory 6000

Direct Materials Used 34,000

Conversion Costs

Add Direct Labor 21,000

Factory Over Head

Indirect Materials 50

Indirect Labor 14,000

Rent On Factory Building 3000

Depreciation (equip) 5000

Utilities 4000

Property Tax 2000

Insurance 1000

Total Factory Overhead / Total Manufacturing Costs 29,050

Deduct Under applied Overhead 250

Overhead applied to work in process 28,800

Total Manufacturing Costs 83,800

Add Beginning Work In Process 4000

Total Goods in Process 87,800

Less Ending Work In Process 39,800

Cost Of Goods Manufactured 48000

Add opening Finished Goods 12,000

Cost of Goods Available for Sale 60,000

Less Closing Finished Goods 24000

Cost Of Goods Sold 36000

Add underapplied overhead 250

Cost of goods Sold (adjusted for under applied overhead**) 36,250

* * The company closes under applied or over applied overhead into cost of goods sold. Hence, $ 250 balance in under applied overhead is added to the cost of goods sold for the month.