The accounting records of company iclude the followinginformation relating to th

Question

The accounting records of company iclude the followinginformation relating to the current year:                                                                                               Dec1              Jan1 Materialsinventory...............................................................$20,000         $25,000 Work in processinventory...................................................   37,500           40,000 Finished goods inventory,Jan1(10,000 units@ $21 perunit)..     ?               210,000 Purchases of direct materials duringyear............................... 330,000 Direct labor costs assigned toproduction.............................   375,000 Manufacturingoverhead......................................................  637,500 c. Compute the cost of goods sold during the year, assumingthat the FIFO method of inventory costing is used The accounting records of company iclude the followinginformation relating to the current year:                                                                                               Dec1              Jan1 Materialsinventory...............................................................$20,000         $25,000 Work in processinventory...................................................   37,500           40,000 Finished goods inventory,Jan1(10,000 units@ $21 perunit)..     ?               210,000 Purchases of direct materials duringyear............................... 330,000 Direct labor costs assigned toproduction.............................   375,000 Manufacturingoverhead......................................................  637,500 c. Compute the cost of goods sold during the year, assumingthat the FIFO method of inventory costing is used

Explanation / Answer

Computation of Cost of goods sold:

     Beginning inventory of finished goods(10,000 units @$21 per unit)

$210,000

     Current year manufactured units (30,000 units @$30 per unit)

$900,000

     Cost of goods sold (10,000units + 30,000 units = 40,000 units)

$1,110,000

Computation of Cost of goods sold:

     Beginning inventory of finished goods(10,000 units @$21 per unit)

$210,000

     Current year manufactured units (30,000 units @$30 per unit)

$900,000

     Cost of goods sold (10,000units + 30,000 units = 40,000 units)

$1,110,000

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