Question

The following data from the just-completed year are taken from the accounting records of Eccles Company: $ 706,000 99,000 141,000 109,000 52,000 219,000 238,000 Sales Direct labour cost Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs Beginning of Year $ 8,900 5,900 70,900 End of Inventories: Year $10,900 20,900 25,900 Raw materials Work in process Finished goods Required: 1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials. ECCLES COMPANY Schedule of Cost of Goods Manufactured Direct materials: Raw materials used in production Total manufacturing cost Cost of goods manufactured

Answer 1

Ans:

ECCLES Company
Cost of goods manufactured
Direct materials:
Beginning Raw Material inventory		8,900
Add:Purchases of raw materials		141,000
Raw materials available for Use		149,900
Less :Ending Raw materials		-10,900
Raw materials used in production			139,000
Direct labor cost			99,000
Manufacturing overhead applied to work in process			219,000
Total manufacturing cost			457,000
Add:Beginning work in process Inventory			5,900
Less :Ending work in process			-20,900
Cost of goods manufactured			442,000
ECCLES Company
Schedule of cost of goods sold
Beginning Finished goods inventory			70,900
Add: cost of goods manufactured			442,000
Goods available for sale			512,900
Less: Ending finished goods inventory			-25,900
Unadjusted cost of good sold			487,000
Add:Under Applied Overhead			19,000
Adjusted cost of goods sold			506,000
Note:
Underapplied Manufacturing Overhead = Actual Manufacturing Overhead - Manufacturing Overhead applied
= 238000 - 219000
= 19000
ECCLES Company
Income Statement
sales			706,000
Less: cost of goods sold			506,000
Gross profit			200,000
Selling and administrative expense:
Selling expense			109,000
Administrative expense			52,000
Net income			39,000