I am taking my first class in Accounting and I am having difficulties with my homework.

I have the following problem, that I have done in several ways and I always get an answer that is greater that the correct one. These are the figures (in thousands of dollars):
Direct Labor Cost: $10,500
Purchase of Materials: 15,000
Supplies used: 675
Factory Insurance: 350
Advertising: 800
Material Handling: 3,745
Work-in-process inventory, 12/31/2003: 12,500
Work-in-process inventory, 12/31/2004: 14,250
Material Inventory, 12/31/2003: 3,475
Material Inventory, 12/31/2004: 9,500
Finished goods inventory, 12/31/2003: 6,685
Finished goods inventory, 12/31/2004: 4,250

1. Prepare a statement of cost of goods manufactured. (Correct answer is 24720, my answer is 29780)
2. Prepare a statement of cost of goods sold. (Correct answer is 27155, my answer is 32215)

gperez

Cost of Goods Sold
Finished goods inventory, beg. of period $6,685
Cost of goods manufactured 24,720
Goods available for sale 31,405
Finished goods inventory, end of period 4,250
Unadjusted cost of goods sold 27,155
Overapplied overhead -
Cost of goods sold $27,155

yessedo

Direct Materials
Beg: Material Inventory 3,475
Add: Purchased Materials 15,000
Materials available for use 18,475
Deduct: Ending Mat. Inven. 9,500
Raw materials used in prod. 8,975

Direct Labour 10,500

Manufact. Overhead
Insurance, Factory 350
Supplies Used 675
Advertising 800
Material Handling 3,745
Total Overhead 5,570

Total Manufacturing Overhead 25,045
Add: Beg. Work In Process 12,500
37,545
Deduct: End Work In Process 14,250

Cost of Goods Manufactured 23,295

I have gone over this a few times. The only thing I can figure is that some figures are missing or different. Check your figures. But the above is the format used to calculate the Cost of Goods Manufactured.

morgaine300

yessedo is the closest to being right, but one error: advertising isn't overhead. It's a selling cost and is not a manufacturing cost at all.

I originally included the supplies because it looked like everything was production costs. But once I saw the advertising in there, I became unsure of the supplies. It doesn't specify if they are factory supplies. But I already included it, so I left it. I am not getting the answer that was supplied, and removing the supplies will not get that answer. I can't find any combination of anything that would fix it to the answer given. But except for the questionable supplies, what I've done is correct.

nina, it helps a whole lot if you provide the work you have done so that it is easier to see where you've gone wrong. We aren't here to do your homework for you, but rather to help you understand the work and help correct what you've done. Can't do that if you don't provide your work. But since yessedo has already posted what is darn close to being correct, I just went ahead and did the thing.

If you use their answer for COGM, then the COGS would come out to their answer also.

Attached Files

COMM.xls (13.5 KB, 262 views)

muslimrao

Ya Absoulatory. You are right. Advertising is not an overhead.!

answer must be 22,495

KJMarx52

4,250 -- Finished Goods Inventory (EOY)
27,155 -- ADD: Cost of Goods Sold
31,405 -- Cost of Goods Available for Sale
6,685 -- LESS: Finished Goods Inventory (BOY)
24,720 -- Cost of Goods Manufactured