Question

Carlton Manufacturing Company provided the following details about operations in February:

The company also provided details regarding the balances in the inventory accounts at the beginning and end of the month as follows:

Raw materials used in production cost $155,520, total overhead costs for the year were $188,720, the goods available for sale totalled $384,000, and the cost of goods sold totalled $335,500.

Required:

1-a. Prepare a schedule of cost of goods manufactured of the company's income statement for the year.

Answer 1

$155,520 (given) 33,700 CARLTON MANUFACTURING Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning $ 31,000 Add: Purchases of raw materials 148.000 Raw materials available for use 179,000 Deduct: Raw materials inventory, ending 23.480 * Raw materials used in production Direct labour Manufacturing overhead: Insurance, factory 4.300 Rent, factory building 57.720 * Utilities, factory 27.200 Indirect materials, factory 3,300 Depreciation factory equipment 57,400 Maintenance, factory 38.800 Total overhead costs Total manufacturing costs Add: Work in process inventory, beginning 188.720(given) 377.940 26.400 404,340 38.340* $366.000 ** Deduct: Work in process inventory, ending... Cost of goods manufactured ** Computed in Cost of Goods Sold section next page

Cost of goods sold section of the income statement follows: Finished goods inventory, beginning $ 18,000 | Add: Cost of goods manufactured 366.000* Goods available for sale 384.000(given) Deduct: Finished goods inventory, ending 48.500 * Cost of goods sold $335,500 * These items must be computed by working backwards up through the statements. An effective way of doing this is to place the form and known balances on the paper, and then work toward the un-known figures.

Answer 2

Solution:

Schedule of Cost of Goods Manufactured
Direct Materials:
Beginning Inventory of Raw Material					31,000
Add: Purchase of Raw Materials					148,000
Raw Materail Available for use					179,000
Less: Ending Inventory of Raw Material					23,480
Raw Material Used in Production							155,520
Direct Labour							33,700
Prime Cost							189,220
Manufacturing Overhead:
Maintenance, Factory					38,800
Depreciation, Factory Equipment					57,400
Indirect Materials, Factory					3,300
Utilities, Factory					27,200
Insurance, Factory Equipment					4,300
Rent, Factory Building (Bal. Fig.)					57,720
Total Overhead Costs							188,720
Total Manufacturing Cost							377,940
Add: Beginning Inventory of Work in Progress							26,400
							404,340
Less: Ending Inventory of Work in Progress							38,340
Cost of Goods Manufactured (Bal. Fig.)							366,000
Add: Beginning Inventory of Finished Goods							18,000
Cost of Goods Available for sale (Given)							384,000
Less: Ending Inventory of Finished Goods							48,500
Cost of Goods Sold (Given)							335,500

Workings:

1. Cost of Goods Manufactured = Cost of Goods Available for Sale - Beginning Inventory of Finished Goods
									2. Ending Inventory of WIP    =   (Total Manufacturing Cost + Beginning WIP) - Cost of Goods Manufactured