Question

Vernon Manufacturing Company began operations on January 1. During the year, it started and completed 1,650 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs: Raw materials purchased and used—$3,140. Wages of production workers—$3,490. Salaries of administrative and sales personnel—$1,890. Depreciation on manufacturing equipment—$5,415. Depreciation on administrative equipment—$1,830. Vernon sold 1,060 units of product. Required Determine the total product cost for the year. Determine the total cost of the ending inventory. (Do not round intermediate calculations.) Determine the total of cost of goods sold. (Do not round intermediate calculations.)

Answer 1

Total Product Cost

Total Product Cost = Cost of Raw materials purchased and used + Wages of production workers + Depreciation on manufacturing equipment

= $3,140 + $3,490 + $5,415

= $12,045

Total cost of the Ending Inventory

Total number of units completed = 1,650 Units

Total Number of units sold = 1,060 Units

The Ending Inventory = 590 Units (1,650 Units – 1,060 Units)

Therefore, The Total cost of the Ending Inventory = ($12,045 / 1,650 Units) x 590 Units

= $4,307

Total of cost of goods sold

Total of cost of goods sold = Total Product Cost - Total cost of the Ending Inventory

= $12,045 - $4,307

= $7,738