1) The following cost and inventory data were taken from the records of the Flag

Question

1) The following cost and inventory data were taken from the records of the Flagstaff Company for the year: Costs incurred: Depreciation, factory equipment Depreciation, office equipment Supplies, factory Maintenance, factory equipment Utilities, factory Sales commissions Indirect labor Rent, factory building Purchases of direct materials (net) Direct labor Advertising expense 7,000 1,500 20,000 8,000 30,000 54,500 70,000 124,000 80,000 90,000 Inventories: Direct materials Work in process Finished goods Required: January 1December 31 $11,000 21,000 24,000 $9,000 6,000 69,000 (a) Compute the cost of goods manufactured. (b) Prepare a cost of goods sold statement. Answer: (a)

Explanation / Answer

COST OF GOODS MANUFACTURED: Beginning Work in process 6,000 Manufacturing cost during the year Direct Material Beginning inventory 9000 Purchases 124000 Direct material available 133000 Ending inventory 11000 Direct material put into production 122000 Direct labour 80000 Manufacturing Overehads Depreciation 30000 Supplies 1500 maintenance 20000 Utilities 8000 Indirect labour 54500 Rent 70000 Total Manufacturing Overheads 184000 Total Mnaufacturing cost incurred 392000 Ending Work in process -21000 Cost of goods manufactured 371000 COST OF GOODS SOLD Beginning Finished Goods inventory 69000 Cost of goods manufactured 371000 Cost of goods available for sale 440000 Ending finished goods inventory 24000 Cost of goods sold 416000

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