[Smexy]

Hello guys, I just need help on something.

I was asked to prepare a statement of cost of goods manufactured. I really can't analyze this problem. I kind of need a guide :)

a. Total Manufacturing cost during the year was P1,000,000, including direct materials, direct labor and factory overhead.

b. Cost of goods manufactured during the year was P970,000.

c. factory overhead charged to work in process was 75% of direct labor cost and 27% of the total manufacturing cost.

d. The beginning work in process inventory, January 1, was 40% of the ending work in process inventory, December 31.

Required: Prepare a statement of cost of goods manufactured for the year ended.

* I already tried it by setting up a statement of cost of goods manufactured and tried putting the given information at the appropriate spaces. But unfortunately, It's kind of algebraic and I really don't know how to start solving it.

[Smexy]

Cost of direct materials xxxxx
Direct Labor xxxxx
Factory overhead xxxxx
Total Manufacturing Cost P1,000,000
Add : Work in Process Inventory, Jan. 1 xxxxx
Total Goods Placed in Process xxxxx
Less: Work in Process Inventory, Dec. 31 xxxxx
COST OF GOODS MANUFACTURED P970,000

[HelpinHere]

Well, give us the "algebriac statement" you have already prepared.
We could tell you if it's correct, and help you solve it.
It's important to know the progress you have made on your own to give appropriate help on this board.

EDIT: Okay, that's what is nicknamed, a "shopping list", a basic list of any information needed to complete the equation. If I may, why the P before all the ammounts? (sorry if it's obvious, but not how I was taught)

[Smexy]

Hmmm... how about this?

1M + .4[ .75X + .27 (1M)] = 970,000 - (.75X + 270,000)

lalala, I know its wrong. I'm getting confused...

[Smexy]

uhmm... can I just ask for the algebraic equation or a guide to solve this thing?

[Smexy]

And by the way... the letter P are just peso signs...

[morgaine300]

If we gave you the algebraic equation, we would essentially be doing your work for you.

You're trying to be complicated and solve everything at once. Do one thing at a time. Start with the total manufacturing costs and see if you can get direct material, direct labor and overhead. You've already got the .27(1million). That's a start.

Then work on direct labor. Overhead is 75% of the direct labor, so once you have overhead (easily figured out), then you know that's 75% of some unknown number. Can you get to that unknown? [.75X + .27(1million)] doesn't work. The overhead is 75% of labor, and it's also 27% of the total, so basically by doing that you're adding overhead and overhead. Do you see that? If you get those, direct material will be obvious.

Work that all out first. If you get that, then see what you can do with the rest, but do that first.

[HelpinHere]

Well, I just saw this thread again, but I'd have to say basically what morgaine said.
Take everything a step at a time. You cannot climb up a ladder by stepping on only one rung. You must make it up one part at a time.

I agree with how morgaine said to start, too.
Don't start with "[.75X + .27(1million)]" all on one side of the equation.
Instead, you need to find x, where
.75X = .27(total)

[Smexy]

Cost of direct materials 370,000
Direct Labor 360,000
Factory overhead 270,000
Total Manufacturing Cost P1,000,000
Add : Work in Process Inventory, Jan. 1 20,000
Total Goods Placed in Process 1,020,000
Less: Work in Process Inventory, Dec. 31 50,000
COST OF GOODS MANUFACTURED P970,000


CAN U GUYS CHECK THIS OUT?

[morgaine300]

Yup, it's all correct.

[BokBok2]

Hey how did you get the cost of direct materials, labor and factory overhead, and also the beg. Work in process inventory and End WIP. *** show your complete solution thank you!