Question

E2-26A Compute Cost of Goods Manufactured and Cost of Goods Sold Learning Objective 5) Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amounts described next. Assume that the Raw Materials Inventory contains only direct materials Beginning End Year of Year End of Year of Raw materials inventory Work in process inventory Finished goods inventory $23,000 $25,000 Insurance on plant..$ 11,500 $35,000 $31,000 Depreciation-plant building and equipment.. $ 13,400 S 3,700 $20,000 $22,000 Repairs and maintenance-plant.... Purchases of direct materials.... $74,000 Marketing expenses... $86,000 General and administrative expenses. $28,500 $42,000 S77,000 Direct labor

Answer 1

Cost of goods manufactured = Opening raw materials + opening WIP + Purchase of Direct Materials + Direct Labour + Indirect labour + Insurance on plant + Depreciation on plant building and equipment + repairs & maintainance plant - closing raw materials - closing WIP

= 23,000 + 35,000 + 74,000 + 86,000 + 42,000 + 11,500 + 13,400 + 3,700 - 25,000 - 31,000

Cost of goods manufactured = $232,600

Cost of goods sold = Opening finished goods + cost of goods manufactured - closing finished goods

= 20,000 + 232,600 - 22,000

Cost of goods sold = $230,600