Question

The following data from the just completed year are taken from the accounting records of Eccles Company: Sales Direct labour cost Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs $ 769,000 108,000 150,000 118,000 61,000 228,000 256,000 Inventories: Raw materials Work in process Finished goods Beginning of Year $ 9,800 6,800 71,800 End of Year $11,800 21,800 26,800 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

Solution

ECCLES COMPANY
Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$          9,800.00
Raw material Purchased	$    150,000.00
Raw material available for use	$    159,800.00
Less: Raw material Inventory Ending	$        11,800.00
Direct Material Used		$     148,000.00
Direct labor		$     108,000.00
Total Manufacturing overheads Applied		$     228,000.00
Total manufacturing Cost During the month		$     484,000.00
Add: Work in process Beginning		$           6,800.00
Total Work in Process		$     490,800.00
Less: Work in progress Ending		$         21,800.00
Cost of Goods Manufactured		$     469,000.00

.

ECCLES COMPANY
Schedule of cost of goods sold
Beginning Finished Goods Inventory		$         71,800.00
Add: Cost of goods manufactured		$     469,000.00
Goods Available for sale		$     540,800.00
Less :Ending Finished goods Inventory		$         26,800.00
Unadjusted Cost of Goods Sold		$     514,000.00
Underapplied Manufacturing overheads		$         28,000.00
Adjusted cost of goods sold		$     542,000.00

.

ECCLES COMPANY
Income statement
Sales revenue		$     769,000.00
Less: Cost of goods sold		$     542,000.00
Gross profit		$     227,000.00
Selling and administrative expenses
Selling expenses	$    118,000.00
Administrative expenses'	$        61,000.00	$     179,000.00
Net income		$         48,000.00