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    nina7131's Avatar
    nina7131 Posts: 1, Reputation: 1
    New Member
     
    #1

    Jan 9, 2005, 06:49 PM
    Cost of Goods Manufactured
    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's Avatar
    gperez Posts: 2, Reputation: 1
    New Member
     
    #2

    Nov 10, 2005, 09:33 AM
    Cos Of Goods Sold
    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's Avatar
    yessedo Posts: 5, Reputation: 1
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    #3

    Jun 8, 2008, 06:12 AM
    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's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Jun 8, 2008, 03:56 PM
    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 did the thing.

    If you use their answer for COGM, then the COGS would come out to their answer also.
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  2. muslimrao's Avatar
    muslimrao Posts: 34, Reputation: 2
    Junior Member
     
    #5

    Oct 24, 2008, 10:52 PM
    Ya Absoulatory. You are right. Advertising is not an overhead.

    Answer must be 22,495

    Quote Originally Posted by morgaine300 View Post
    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.
    KJMarx52's Avatar
    KJMarx52 Posts: 1, Reputation: 1
    New Member
     
    #6

    Jul 24, 2009, 12:30 PM
    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

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