Inventory data for the year Cost incurred Raw material purchased 125,000 Direct

Question

Inventory data for the year

Cost incurred

Raw material purchased                125,000

Direct labor                                         75,000

Indirect labor                                       40,000

Equipment maintenace                      10,000

Insurance on factory                           30,000

Rent on factory                                     12,000

Equipment depreciation                      20,000

Factory supplies                                     11,000

Advertising expenses                             15,000

Selling and administrative expenses   21,000

List the cost not included in the calculations of cost of goods manufactured and cost of goods sold, and discuss why you exclude them from those calculations.

If raw materials and work in progress inventories had decreased during the year, would the finacial statements be different? How?

Explanation / Answer

Particulars $ Raw Material Purchase          125,000 Direct Labour            75,000 Indirect Labour            40,000 Equipment Maint            10,000 Insurance of Factory            30,000 Rent on Factory            12,000 Equipment Depreiciation            20,000 Factory Supplies            11,000 Cost of Goods Manufactured          323,000 Selling and Administrative Exp            21,000 Advertising Exp            15,000 Cost of Goods Sold          359,000

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