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    jyn23's Avatar
    jyn23 Posts: 5, Reputation: 1
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    #1

    Feb 18, 2006, 11:11 AM
    HELP! Finding Less Inventory Cost
    Prepare income statements for July under the absorption costing concept.

    Sales 450000
    Manufacturing Costs:
    direct materials 241800
    direct labor 62400
    variable manufacturing cost 35100
    fixed manufacturing cost 34320
    selling and admin. Expenses:
    variable 18000
    fixed 12600

    I cannot figure the less inventory amount. On the spreadsheet it gives a hint: cost of goods manufactured /units produced and cost of goods manufactured per unit x units in ending inventory.

    The cost of goods manufactured is 373620. HELP PLEASE!! :confused:
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Feb 18, 2006, 01:17 PM
    direct materials 241800
    direct labor 62400
    variable manufacturing cost 35100
    fixed manufacturing cost 34320

    Add those together, you get total cost of good manufactured which is $373,620

    Divide that by the number of units you produced and you have your price/unit
    jyn23's Avatar
    jyn23 Posts: 5, Reputation: 1
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    #3

    Feb 18, 2006, 01:34 PM
    Quote Originally Posted by CaptainForest
    direct materials 241800
    direct labor 62400
    variable manufacturing cost 35100
    fixed manufacturing cost 34320

    Add those together, you get total cost of good manufactured which is $373,620

    Divide that by the number of units you produced and you have your price/unit
    I know how to do that but I don't know how to come up with the less inventory amount. The book states there was 39000 tshirts produced and 36000 of those were sold. So wouldn't that leave the ending inventory 3000 units?

    So I took the 373620 and divided it by 39000 which gave me 9.58 per unit so I took that amount and times it by the ending inventory of 3000 and it gave me 28740. When I input that amount on personal trainer as the "ending inventory" it says its wrong!! What am I missing?? THANK YOU
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #4

    Feb 18, 2006, 03:05 PM
    What was the beginning inventory?
    jyn23's Avatar
    jyn23 Posts: 5, Reputation: 1
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    #5

    Feb 18, 2006, 03:08 PM
    This is all the book states:

    During the first month of operations ended July 31 2006, Sound Off Shirt Company produced 39000 T-Shirts, of which 36000 were sold. Operating data for the month are summarized as follows: (( which is the list I gave in the first posting).

    So all I know as far as inventory is what is in bold above! Does this help? I'm getting soooo frustrated! Thank you!!
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #6

    Feb 18, 2006, 03:15 PM
    I agree with you.

    I think it should be 9.58 x 3000 = 28,740

    http://www.valuebasedmanagement.net/...n_costing.html

    Perhaps it is a mistake with the program.
    jyn23's Avatar
    jyn23 Posts: 5, Reputation: 1
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    #7

    Feb 18, 2006, 03:21 PM
    I Hate The Personal Trainer Program However I'm Stuck With It For The Next Few Weeks! Thank You So Much For All Your Help And Quick Replies!
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #8

    Feb 18, 2006, 03:31 PM
    Quote Originally Posted by jyn23
    I Hate The Personal Trainer Program However I'm Stuck With It For The Next Few Weeks! Thank You So Much For All Your Help And Quick Replies!
    Are you using some kind of program to make the first letter's capitalized in each word?

    Anyway, your welcome.
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