The following information is available for the first month of opoerations of Bro

Question

The following information is available for the first month of opoerations of Brown Company, a manufactured of mechanical pencils:
Sales $600,000
Gross profit $350,000
Cost of good manufactured $300,000
Indirect labor $130,000
Factory depreciation $ 20,000
Materials purchased $185,000
Total manufacturing costs for the period $345,000
Materials inventory $25,000
Using the above information, determine the followin missing amouts:
a) Cost of goods sold
b) Finished goods inventory
c) Direct materials cost
d) Direct labor cost
e) Work in process inventory

Explanation / Answer

a) Cost of goods sold Cost of goods sold = Sales - Gross Profit                                = $600,000 - $350,000                                =$250,000 b)Finished goods inventory Finished goods inventory, Beginning              $ 0 Add: Cost of goods manufactured              300,000                                                              _____________ Goods available for sale                             300,000                                                              _____________ Finished goods inventory = Goods available for sale - Cost of goods sold                                        = 300,000- 250,000                                        = 50,000 c) Direct materials cost Beginning raw materials inventory                  $ 0 Add: Purchases of raw materials                 185,000                                                              ____________ Raw materials available for sale                  185,000 Deduct: Ending raw materials                       25,000                                                               ____________ Raw materials used in production               160,000                                                               ____________ Direct material cost                                   $160,000 d) Direct labor cost Direct labor cost = Total direct material cost - Total manufacturing overhead                            = $160,000 - 345,000 e) Work in process inventory The difference between the total manufacturing cost and the cost of goods manufactured. Work in process inventory = $345,000 - 300,000                                          = $45,000 d) Direct labor cost Direct labor cost = Total direct material cost - Total manufacturing overhead                            = $160,000 - 345,000 e) Work in process inventory The difference between the total manufacturing cost and the cost of goods manufactured. Work in process inventory = $345,000 - 300,000                                          = $45,000

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