Question

The Zoe Corporation has the following information for the month March. Determine the (a) cost of goods manufactured, and (b) cost of goods sold.

Cost of materials placed in production $69,000
Direct labor 27,000
Factory overhead 34,000
Work in process, March 1 15,000
Work in process, March 31 19,500
Finished goods inventory, March 1 25,000
Finished goods inventory, March 31 23,000

Answer 1

Concepts and reason

Inventory: Manufacturing or a trading business involves selling of goods. Goods that are sold in the ordinary course of business are called as inventory. Inventory includes raw materials, work in process, and finished goods. Raw materials are used to produce finished goods. Work in process is unfinished inventory that requires some work to complete it to saleable condition. Finished goods are inventory that are ready to be sold.

Fundamentals

Cost of goods manufactured: cost of goods manufactured provides for the total cost of finished goods manufactured and unsold at the end of the period. It is calculated using the below formula:

Cost of goods sold: Cost of goods sold provides for the cost of goods actually sold during the period. It is calculated using the below formula:

(a)

Cost of goods manufactured during March is:

Cost of goods manufactured during the month of March is

(b)

Cost of goods sold for the month of March is:

Cost of goods sold during March is

Ans: Part a

Cost of goods manufactured during March is $125,500.

Part b

Cost of goods sold is $127,500.