Question

How do I prepare a statement of cost of goods sold and a statement of cost of goods manufactured for the following information. Also- what equations are used.

Beginning Finished Goods		1,375,200
Beginning Materials		856,000
Beginning WIP		725,000
Direct Labor		836,700
Ending Finished Goods		1,145,670
Ending Materials		871,350
Ending WIP		697,300
Manufacturing Overhead		2,579,220
Purchases (materials)		?
Sales		10,025,000
Note: gross profit is 40% of sales

Answer 1

Statement of Cost of Goods Manufactured Direct materials: Beginning raw materials inventory $ 856,000 Add: Raw materials purchases $ 2,357,200 Raw Materials available for use 3,213,200 Less: Ending raw materials inventory $ 871,350 Direct materials used Direct labor Manufacturing overhead Total Manufacturing Costs Add: Beginning work in process inventory Total cost of work in process Less: Ending work in process inventory Cost of goods manufactured $ 2,341,850 836,700 2,579,220 5,757,770 725,000 6,482,770 697,300 5,785,470 $ $ $ $ Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of goods manufactured Cost of goods available for sale Less: Ending finished goods inventory Cost of goods sold $ $ $ 1,375,200 5,785,470 7,160,670 1,145,670 6,015,000

Gross profit = Sales * Gross profit rate
Gross profit = $10,025,000 * 40%
Gross profit = $4,010,000

Cost of goods sold = Sales - Gross profit
Cost of goods sold = $10,025,000 - $4,010,000
Cost of goods sold = $6,015,000

Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
$6,015,000 = $1,375,200 + Cost of goods manufactured - $1,145,670
Cost of goods manufactured = $5,785,470

Cost of goods manufactured = Beginning work in process inventory + Total manufacturing costs - Ending work in process inventory
$5,785,470 = $725,000 + Total manufacturing costs - $697,300
Total manufacturing costs = $5,757,770

Total manufacturing costs = Direct materials used + Direct labor + Manufacturing overhead
$5,757,770 = Direct materials used + $836,700 + $2,579,220
Direct materials used = $2,341,850

Direct materials used = Beginning raw materials inventory + Raw materials purchases - Ending raw materials inventory
$2,341,850 = $856,000 + Raw materials purchases - $871,350
Raw materials purchases = $2,357,200