dsturner3 Posts: 2, Reputation: 1 New Member #1 Sep 21, 2007, 08:33 AM
Schedule Cost of goods manufactured and cost of goods sold
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
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
 dsturner3 Posts: 2, Reputation: 1 New Member #2 Sep 21, 2007, 08:34 AM
Prepare a cost of goods manufactured schedule and cost of goods sold scheudle
 hippwr22307 Posts: 1, Reputation: 1 New Member #3 Feb 18, 2009, 03:36 PM
Cost of Goods Manufactured
Company
Date
Direct Materials:
Beginning raw materials inv. 3,475
Purchase of raw materials 15,000
Materials available 18,475
Ending raw materials inv. (9,500)
Total DM: 8,975
Direct Labor: 10,500

Material Handling: 3,745
Supplies used: 675
Factory Insurance: 350
Total MOH: 5,570

Total Manufacturing Cost: 25,045

Beginning Work in process Inventory 12,500
33,000
Ending work in process Inventory (14,250)
Cost of Goods Manufactured 23 295
Cost Of Goods Sold
Company
Date

Beginning Finished goods inventory: 6,685
Cost of Goods Manufactured: 23,295
Goods Available: 29,980
Ending Finished goods inventory: 4,250
Cost of Goods Sold: 25,730
 Jalyn_minggai Posts: 1, Reputation: 1 New Member #4 Dec 13, 2009, 05:09 AM
CGM is 23 295!
COGS is 25 730!

 stu__8 Posts: 2, Reputation: 1 New Member #5 Dec 15, 2009, 03:19 PM
are you missing something that is a value of \$1,425, because I just did your question and I am that much off consistently with both answers
 stu__8 Posts: 2, Reputation: 1 New Member #6 Dec 15, 2009, 03:20 PM
Originally Posted by Jalyn_minggai
CGM is 23 295!
COGS is 25 730!

Did not notice this reply here... the answers they got, I also got
 Sassyg14 Posts: 4, Reputation: 1 New Member #7 Feb 11, 2010, 08:51 AM
In the above solution I 33,000... where did that come from?
 morgaine300 Posts: 6,561, Reputation: 276 Uber Member #8 Feb 14, 2010, 11:01 PM

First, hippwr22307, please always start your own thread instead of tagging onto someone else's. If everyone did that, we'd have a big mess. Also, it would have been nice to have someone post the problem itself again so that I could see if there's missing information, because I disagree with all of you, and I disagree with the supposedly correct answers posted by OP.

The 33,000 is just a calculation error, so I'll ignore that. Using those numbers, the total manufacturing costs would be 23,295. And, Jalyn_minggai, calm down, cause that isn't right either. The math is right, but the overhead isn't correct to start with. So if you want to YELL AT someone for having an INCORRECT ANSWER, you might notice that yours isn't correct either.

Advertising is not an overhead cost. (Not manufacturing overhead anyway.) It's a selling cost. It's a period cost, not a product cost. The supplies is questionable. "Supplies" by itself would be an admin cost, again period, not product. It doesn't say factory supplies or anything else to indicate that it's for the production.

However, when people copy problems, they many times leave out those words because they think them unimportant and are trying to just type as quickly as possible. However, those "unimportant" words are important and have to be there to solve the problem correctly.

In other words, I don't know the correct answer, because I don't know if supplies are office supplies or factory supplies or what. If they included advertising in that mess, they could certainly include non-factory supplies. So I did it with and without it. One way I get 24,630 and the other 23,655, for COGS. And then 22,195 & 21,220 for COGM.

Notice this is way off from what OP said the "correct" answers are supposed to be. I plugged those answers in and worked backwards. In order for that to work, overhead would have to be 6995. Even if I include every cost, including the advertising that absolutely doesn't belong, I can't find that much in overhead. I see no way the check figures from OP could be correct.

As for the 5570 that isn't correct cause of the advertising. It's either 4470 or 37 - can't read my own writing. Well, 4470 minus supplies of 675 if we don't include them.

If someone wants to post the original problem VERBATIM, I can check it again.
 ikramlatif Posts: 1, Reputation: 1 New Member #9 Apr 6, 2011, 12:02 PM
Cost of Goods Manufactured and Sold Statement Formulas:
Prime Cost = Direct Materials Cost + Direct Labor Cost
Total Factory Cost or Manufacturing Cost = Direct Materials + Direct Labor Cost + Factory Overhead
Conversion Cost = Direct Labor Cost + Factory Overhead Cost
Cost of Goods Manufactured (COGM) = Total Factory Cost + Opening Work in Process Inventory - Ending Work in Process Inventory
Or
Cost of Goods manufactured = Direct materials cost + Direct labor cost + Factory overhead cost + Opening work in process inventory - Ending work in process inventory
Cost of goods sold (COGS) = Cost of goods manufactured + Opening finished goods inventory - Ending finished goods inventory
Or
Cost of goods sold = Direct materials cost + Direct labor cost + Factory overhead cost + Opening work in process inventory - Ending work in process inventory + Opening finished goods inventory - Ending finished goods inventory
Number of units manufactured = Units sold + Ending Finished Goods units - Opening finished goods units
Per unit cost of goods manufactured = Cost of goods manufactured / Units manufactured
Materials used or consumed = Opening inventory or materials + Net purchases of materials - Ending inventory of materials
Income statement formulas:
Gross profit = Net sales - Cost of goods sold
Operating profit = Gross profit - Operating expenses
Operating or commercial expenses = Selling or marketing expenses + General or administrative expenses
Per unit gross profit = Gross profit / No. of units sold
Per unit net profit = Net profit / No. of units sold
Percentage of GP to sales = (Gross profit / Net sales) × 100
Percentage of net profit to sales = (Net profit / Net sales) × 100
 smartycute Posts: 2, Reputation: 1 New Member #10 Jul 6, 2012, 01:53 AM
what is periodic cost..
and could you give me all items to be included in overhead.. segregated if it is variable or fix?. its really hard to identify..

then the correct format for income statement... along with there notes..
 smartycute Posts: 2, Reputation: 1 New Member #11 Jul 6, 2012, 01:57 AM
.contingent liability and deffereals due this year.. is noncurrent liability?

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