Gravois, Inc., incurred the following costs during June: Selling expenses . . .
ID: 2349832 • Letter: G
Question
Gravois, Inc., incurred the following costs during June:Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $158,375
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,140
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,065
Manufacturing overhead, actual . . . . . . . . . . . . . . . . . . . . . . . . 204,750
Raw materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460,980
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,000
During the month, 19,500 units of product were manufactured and 11,000 units of product were sold. On June 1, Gravois, Inc., carried no inventories. On June 30, there were no inventories for raw materials or work in process.
a. Calculate the cost of goods manufactured during June and the average cost per unit of product manufactured.
b. Calculate the cost of goods sold during June.
c. Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the ?nancial statements?
Explanation / Answer
a. Calculate the cost of goods manufactured during June and the average cost per unit of product manufactured.
cost of goods manufactured:
Direct materials used
460980
Direct manufacturing labor
283140
manufacturing overhead
204750
cost of goods manufactured
948870
Average cost per unit manufactured: 948,870/19500 = $48.66 per unit
b. Calculate the cost of goods sold during June.
cost of goods sold = 11,000*48.66 = $535,260
c. Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the ?nancial statements?
Difference = 948,870 – 535,260 = $413610
The difference is reported on the balance under inventories ( assets).
cost of goods manufactured:
Direct materials used
460980
Direct manufacturing labor
283140
manufacturing overhead
204750
cost of goods manufactured
948870
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