How would you calculate sales revenue, cost of goods sold, cost of goods manufac

Question

How would you calculate sales revenue, cost of goods sold, cost of goods manufactured, direct labor incurred, direct materials used, and factory overhead incurred from the following information:

Accounts receivable        January 1: 27,000   December 31: 33,000

Materials inventory         January 1: 22,500    December 31: 6,000

WIP Inventory                January 1: 70,200    December 31: 48,000

Finished goods inventory January 1: 3,000     December 31: 15,000

Collections on account were 625,000 for the year

Cost of goods sold was 68% of sales

Direct materials purchased amounted to 90,000

Factory overhead was 300% of the cost of direct labor

Please include full calculations.

Explanation / Answer

Sales Revenue=Closing Acc. Receivable+Collection During the year-Openning Acc. Receivable

=33000+625000-27000=631000

Cost of Goods Sold=68% of Sales

=68% of 631000=429080

Cost of goods manufactured=Cost of goods Sold+Closing Finished goods-Opening Finished Goods

=429080+15000-3000=441080

Total Manufactured Cost=Cost of Goods Manufactured+Closing WIP-Opening WIP

=441080+48000-70200=418880

direct Material incurred=Opening Material+Material Purchased-Closing material

=22500+90000-6000=106500

direct labor incurred=Total manufacturing cost-(direct Material Incurred+Factory overhead)

=418880-106500-(300% of direct labor incurred)

100% of direct labor incurred+300% of direct labor incurred=312380

400% of direct labor incurred=312380

direct labor incurred=312380/400*100=78095

Factory overhead=300% of Factory overhead=300%*78095=234285

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