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View Full Version : How do you calcuate cost of good sold without work in process


Mtaylor88
Aug 31, 2010, 11:41 AM
Hillsborough Street Manufacturing Inc.
Hillsborough Street Manufacturing Inc. incurred the following costs in 2009:

Direct materials used
$37,000
Direct labor costs
45,000
Factory rent and utilities
18,000
Factory equipment depreciation
10,000
Marketing expenses
3,000
Administrative expenses
9,000

50,000 units were produced during the year out of which 40,000 units were sold for $10 each. There was no beginning or ending raw materials or work-in-process inventory.

Refer to the Hillsborough Street Manufacturing Inc. information above. Out of the above costs, what amount remains on the balance sheet at the end of 2009?

ebaines
Sep 15, 2010, 08:28 AM
You have your costs of manufacture - including both fixed and variable cost components (be careful to not inlcude expenses like marketing and admin in COGS). These costs are spread over 50K units produced, so you can figure your COGS per unit. If 10K units are still in the warehouse unsold, they are on the books as finished goods inventory. So what is the value of those 10K pieces?